Standing Committee A

[Mr. Derek Conway in the Chair]

Local Government Bill

Clause 78 - Power to change number of valuation bands

Amendment proposed [this day]: No. 163, in 
clause 78, page 39, line 18, at end insert— 
 '(4B) Any order made under this section may apply to a Billing Authority or any number of Billing Authorities.'.—[Mr. Clifton-Brown.]
 Question again proposed, That the amendment be made.

Derek Conway: I remind the Committee that with this we are discussing amendment No. 147, in
clause 78, page 39, line 18, at end add— 
 '(4B) The power under section (4)(a) above includes power to make provision for different proportions for different areas of England and Wales. 
 (4C) The power under section (4)(b) above includes power to make provision for different valuation bands for different areas of England and Wales.'.]

John Pugh: Previously, I think that I stole the thunder of the hon. Member for Bedford (Mr. Hall), so I shall be relatively brief and cue him in. I do not want to make unnecessary enemies and I need every friend that I can get in this place.
 I began by pointing out that the proposal is not about increasing the tax take, as it deals with a review of the distribution of the burden. There is a fair case for saying that that needs doing, and that house price inflation and the widening gap in house prices between regions have created problems for everybody in justifying the fairness of the council tax regime in the first place. I suppose that it represents a move to secure a fair distribution of the tax burden. 
 Given that our tax system is built around property values, I can understand the Under-Secretary finding that extraordinarily difficult, and I would not be surprised if, at times, he finds it tempting to consider the Liberal Democrat proposal for local income tax. That said, in the last sitting, I was surprised to hear the hon. Member for Cotswold (Mr. Clifton-Brown) say that the council tax is working well. That is not the perception where I come from, and we find increasingly that widows in modest houses pay more or less the same charges as stockbrokers. Given that stockbrokers are not doing so well, perhaps I should refer to footballers. 
 Does the Under-Secretary agree that some people, particularly those on fixed incomes who live in modest houses, have something to gain in the banding review? I am not sure whether he would go this far, but, equally, he may want to offer reassurance to people in areas where property values have stayed behind the national average that they have nothing to lose in these 
 circumstances, should there be an increase in respect of the property bands, and nothing to fear from a new band structure. 
 There are still concerns, however, and some can be teased out by discussing this probing amendment. May I sketch two extreme and very different cases? In Liverpool, the vast majority of property falls in band A. It could reasonably be argued that band A covers a range of individuals with different incomes and capacity to pay. Given that the council tax in Liverpool is not to be sneezed at—its authority was the first to break the £1,000 barrier—it could be argued that a little regional and local sensitivity is a necessity. [Interruption.] It was under Liberal Democrat administration, but that was coincidental. It did not happen because of the Liberal Democrats. 
 Equally, there is the issue of London properties. We are all aware of the fact that a large number of people in London have property with a high capital value, but a low income. One wonders how a national system could cope with that. Essentially, the amendment makes a case for regional flexibility. At any rate, attention should be paid to the problems that I have sketched. I am anxious for the Under-Secretary to confirm that he is at any rate aware of those problems and I hope that they can be taken on board during consideration of the legislation. 
 I want the Minister to confirm three things: first, that the proposal has nothing to do with increasing the take from council tax; secondly, that it will provide a mechanism to resolve clear anomalies between people with widely different incomes and properties who pay more or less the same council tax; and, thirdly, that areas with property value increases that are lower than average have the least to fear from the proposal.

Patrick Hall: I hope that amendment No. 147, which stands in my name, adds to the exciting debate that we were having before lunch on the council tax. It addresses important issues relating to council tax, which I believe impact strongly on all our constituents. They will do so particularly after revaluation. Regular revaluation is an essential reform of the council tax system and a welcome proposal. My amendment would strengthen the opportunity for reform.
 I am aware that the Government can change the price range of bands and the payment differentials separating those under the Local Government Finance Act 1992. Clause 78, through the addition of proposed new subsection (4A), will sensibly also allow the Government to change the number of tax bands beyond the existing eight. 
 My amendment would provide the Government with additional powers: first, the ability to introduce different bands in different parts of the country and, secondly, as an alternative approach, the ability to introduce regional variations to payment proportions. The reasoning behind the proposal is the need to address problems that have always been inherent to the council tax, but which have become far worse since 1993. As was said before lunch, there is the key question of the regressive nature of the council tax. The gap between the bottom and the top—between 
 bands A and H—is too narrow and the payment proportions related to those bands are also too narrow. 
 Under the current system, people who live in a band H property pay only three times more than those who live in a band A property, even though the price difference between those bands is at least eightfold. That point was made this morning.

Desmond Swayne: I do not understand what the problem is. Why is that a problem, given that the consumption of services, for which that is the tax payable, will not differ by nearly that amount?

Patrick Hall: Those are precisely the arguments that the Conservatives advanced with regard to the poll tax. Now we hear them again with regard to the council tax. The idea is not a good one because it is not fair. Broadly speaking, taxation should have some relationship to a person's ability to pay.
 I must refer to the regressive nature of the council tax and the threefold difference between top and bottom as well as the eightfold difference in price between top and bottom. In Bedford and Kempston in my constituency, house prices range between about £55,000 and £450,000, but that is not the case nationally. One can point to house prices ranging between £20,000 and £500,000, which is a twenty-fivefold difference.

Desmond Swayne: There is not the correlation that the hon. Gentleman refers to between living in an expensive house and an ability to pay. Indeed, will he acknowledge that the relationship can be inverse? Those living in expensive houses tend to have higher mortgages and, therefore, lower disposable incomes.

Patrick Hall: It might be in the interest of the Conservative party not to develop that theme too well, as it does not bear careful examination. Of course there are examples of people in an expensive house who can barely afford it, but, generally speaking, surely we all live in the real world. The hon. Gentleman's postulation is just not reality in most people's experience.

Geoffrey Clifton-Brown: The hon. Gentleman seems to be arguing for a property wealth tax. What, in an ideal world, would be the correlation between the lowest band and the highest? Would it be a direct correlation between the property with the lowest value in the country—probably £1—and that with the highest value that one could think of, which may be many hundreds of millions of pounds?

Patrick Hall: The amendment does not propose an entirely new tax system, and you might rule me out of order, Mr. Conway, if I attempted to do so on the back of speaking to it. In support of the amendment, I am saying that, broadly speaking, we should seek to obtain a fairer rather than a less fair tax system so that it has public support and is more likely to succeed. That is the important point. The council tax is moving further from the basis on which it started.

Geoffrey Clifton-Brown: The hon. Gentleman is courteous in giving way. He is now saying that his amendment would introduce a fairer system, but he has not said what, in his view, that fairer system is. The Committee might want to vote for his amendment and, although it is improbable, I might want to urge my hon. Friends to vote for it, so will he give us more detail as to his thinking?

Patrick Hall: The hon. Gentleman clearly was not listening when I began my remarks and explained the amendment's purpose, which is to give the Government the opportunity to introduce variations in how council tax is levied so that it is fairer and more efficient in its application. I have not completed my remarks by any means, so I want to make progress and speak to the amendment, which you might think important, Mr. Conway.
 Nationally, the relationship between bands A and H is even more distant than was intended in 1993. In single council tax areas and single council areas, the range can indeed be large—not as large as the national range, but considerable. For example, the difference between bands A and H is thirteenfold in Milton Keynes and thirtyfold in Hull. Other examples illustrate the inherent unfairness in the system, which benefits the well off at the expense of middle and lower-income families. It was always intended to be so, was it not?

Paul Goodman: Surely the hon. Gentleman would best achieve the aim towards which he seems to want to move—his amendment does not cover the point—by trying to introduce a local income tax, which the Liberal Democrats want. That would achieve his objective far more efficiently.

Patrick Hall: The hon. Gentleman is entitled to his opinion, but that does not directly address the points that I am making. Indeed, I have not been able to develop the points that I want to make, so perhaps I may now do so. Obviously, I am ready to give way later.
 The council tax was never intended to be fair. When the Conservatives hurriedly introduced it, they got away with its inherent unfairness because it was replacing the even more unfair flat rate poll tax. Due to that very move, they avoided the criticism that might have been levied had the council tax been introduced as a substitute for the old rating system.

Mark Todd: My hon. Friend has left out part of that argument, which is that the other step that softened the blow was the Government holding down the council tax bill by switching tax to VAT. It is perhaps worth reminding Conservative Members, who live in another world, of exactly what happened in those days.

Patrick Hall: It is interesting to re-run history, and my hon. Friend makes a helpful comment. I was not seeking to go into enormous detail, but I well remember the Conservatives' attempt, which was successful for a while, to buy themselves out of a deep hole.
 Under the clause, the Government will be able to reduce some of that unfairness by introducing 
 additional bands. Even if they do so, however, council tax will remain a uniform system across England. As a result, the unfair effects of the huge regional variations in house price inflation over the past 10 years or so will not be sufficiently addressed. That is an important point. 
 Over the past decade, the price of the same types of property has gone up, on average, by 20 per cent. in parts of the north and by more than 100 per cent. in London and the south-east. I have seen figures of plus 15 per cent. in Hull, 100 per cent. for Bedford and Kempston and more than 200 per cent. for Barking and Dagenham. Of course, there are many other examples. The regional variations can mask what is going on in single council areas. For example, as was mentioned this morning, there are parts of northern towns in which houses cannot be sold and prices have fallen over the years. 
 My amendment would enable the Government to deal with regional variations sensibly and equitably after revaluation. I shall explain that point further. If we simply rely on the uniform national system with payment differentials and then, post-revaluation, uplift the eight council tax bands in line with average house price increases, we will likely see in well over 50 per cent. of houses in areas with below-average house price increases placed in band A. That has been mentioned by the hon. Member for Southport (Dr. Pugh). 
 In Bradford, for example, 44 per cent. of properties are already in band A. The New Policy Institute predicts that that will rise to 64 per cent. at revaluation. In Liverpool, 66 per cent. are in band A, but that will rise to 76 per cent. In Hull, 72 per cent. will rise to 94 per cent. That will mean no changes in council tax for thousands of households that are already paying too much because band A is too broad. Of course, that means that the trend of the council tax becoming, effectively, a flat-rate tax—a poll tax in parts of the country—will be reinforced unless changes are made. 
 Let me deal with areas where house price inflation is above average. In those areas, it is likely that large numbers of lower and middle-income households will jump up and band or two and face even higher council tax bills while high-value properties that are already in band H will not move, and so will pay no more. Again, that would create a divisive and unfair situation, so it is essential that revaluation, vital though that is, does not trigger distortions and unfair tax hikes differentially across the country. Unless the ability to introduce sub-national variations to council tax after the 2005 revaluation is available, that is precisely what will happen. I ask Ministers to take that on board. 
 The intention of the reforms that I propose is to get households with comparable incomes to pay roughly the same council tax if they live in broadly similar house types anywhere in England. A better council tax distribution is clearly needed for each council area. Band A, for example, should be applied to houses that are cheap by local, not national, standards. That is an important way to help low-paid workers and 
 encourage key public sector workers. The significance of that lies in the fact that the relationship between property value and household income is closest at local level.

Geoffrey Clifton-Brown: May I challenge the hon. Gentleman's last statement? How does he equate a property's value with someone's ability to pay? He says that the local variation in property values equates to ability to pay. How does that affect low-paid public sector workers on a national pay bargaining system? They get paid the same wherever they are in the country.

Patrick Hall: I am saying that, as far as council tax is concerned—

Geoffrey Clifton-Brown: And incomes.

Patrick Hall: We cannot reform the private housing market.

Geoffrey Clifton-Brown: That is what the hon. Gentleman said.

Patrick Hall: No, I said that the ability to focus on areas, and to vary council tax accordingly, would be helpful to such groups of workers, and I explained why.
 The ability to introduce regional variations will be needed also if greater equity is to be introduced into the basic council tax system, which is important. That could be done by increasing the number of bands and the payment differentials between them.

Geoffrey Clifton-Brown: What the hon. Gentleman proposes would make it more difficult, in some parts of the south of England, for key public sector workers to afford to live in the areas that need to recruit them. Expensive areas would have more difficulty recruiting low-paid public sector workers if their council tax were increased in the way that the hon. Gentleman suggests.

Patrick Hall: In my view, it would have the opposite effect because there should be a good spread of all the bands in all areas; whereas if we leave things as they are and simply up-rate after revaluation, there will be no band A or B in many parts of the country, and there should be. Banding should be related to the fair spread of property values in any area, so the lowest priced property in the south-east should be in band A, just as the lowest priced property in parts of the north should be in band A, although the market value of those properties would be markedly different.
 If we do not address these matters, the gap between north and south, which is unhelpful, will become greater rather than smaller, so it is important that the Government have the option of introducing regional variations. We are looking a few years ahead and predicting a situation that may or may not arise. On the evidence of the past few years, it is very likely to arise, so I should like the Government to have the ability to act. I acknowledge that these are difficult matters, but the no-change option is no option. I hope that my hon. Friends will accept that there is a need to reform council tax and that my amendment contributes to the debate about that.

David Curry: In politics, the no-change option is always something that ought
 to be considered very seriously. When politicians say that doing nothing is not an option, they are digging a pit for themselves to fall into. One should always look first at the case for doing nothing; that is usually better for the Government and for everyone else.
 Adam Smith laid down a long time ago the qualities of good taxation, which include making tax simple and collectable.

Edward Davey: I do not know whether the right hon. Gentleman has read ''The Wealth of Nations'' recently, but will he admit that another of the principles laid down by Adam Smith was that taxation should be related to the ability to pay?

David Curry: I was going to come to that; I take my Adam Smith one chapter at a time.
 The great merit of the council tax is that it is eminently collectable. The rates of collection are very high, and some authorities are getting close to the maximum, so it is a successful tax in that regard. In principle, council tax was always designed to be a mixture of a tax on property and an individual charge for the cost of delivering services, so it is a mixture of the old rates and the old poll tax. It was designed to have that balance, so to assume that it should be related purely to house values is to distort its origins, and that would be dangerous. 
 Council tax bands have always been based on relativities, not absolutes, so the key point is the relationship between the bands. One of the merits, if it is a merit, of the present system is the narrowness of the bands, which equalises the income that local authorities receive because it does not reflect the pure price differentials of houses. If we introduced more banding or moved to a regional system of banding, a number of questions would arise. The main purpose would, as I understand it, be to relieve people in band A. 
 The change that most local authorities would seek to make would be to subdivide band A, and the hon. Member for Northampton, or somewhere in the south—[Hon. Members: ''Bedford.''] Yes, the hon. Member for Bedford has listed those local authorities with a high number of band A properties. Burnley is the one that we always talk about; Blackburn is another; and the hon. Gentleman has talked about Bradford and large parts of Manchester where band A properties are predominant. The only purpose of subdividing band A would be to allow certain people to pay less; otherwise there would be no point. The Minister nods. 
 If we subdivided band A, and there may be a good case for doing so, the first impact would be significantly to reduce the income flowing to the local authority. That could be sorted out in various ways. The local authority might hope that changing the banding higher up the scale would compensate, but in the local authorities that we have been talking about there is precious little property at the top of the scale, so there is no way that higher taxes there would compensate for a cut at the bottom of the scale. The local authority might go to the Minister for Local 
 Government and the Regions and say, ''Resource equalisation was a good idea. Can we have a lot more of it because our resources have gone down, thanks to voluntary action, so we need compensation?'' That would have repercussions.

Patrick Hall: The right hon. Gentleman said that my proposal is principally about dividing band A into two bands. That may apply in the north, but unless we deal carefully with this matter, areas with high house price inflation will have no band A, band B or even band C property. Everybody's house will be in band D or above, and that would not be fair, would it?

David Curry: My point is that when one talks to local authorities about what they would most like to see happen with council tax, one hears the notion of subdividing band A more than any other proposition, and that would necessarily have the impact that I described. By definition, that proposal is made in areas with precious little other than band A property, so it would have—
Mr. Hall rose—

David Curry: Let me finish my train of thought. By definition that proposal would have the consequences that I have outlined. It may well be that local authorities would like also to raise the ceilings of the higher bands to accommodate rising house values at the top of the scale, but they would have to face householders saying, ''I have been in my house for 20 years, and it is not due to me that it has redoubled in value.'' They might have been part of a regeneration scheme, or they might have been gentrified. They might live in one of those parts of Lambeth where, people having constantly been told that the area is about to gentrified, it has finally happened. Their house price might double but the service would be exactly the same and their income would have stayed pretty well the same. To what extent would it be fair for a higher charge to follow purely on the incidental increase in value, of which they are not in a position to take advantage?
 The measure would have that second consequence, and another possible consequence can be seen if one compares an area with a large number of low value properties, where the local authority might decide to subdivide band A, with an area that had a large number of higher value properties, where the local authority might levy a higher charge. One can see that the gap in income from council tax between the most and least endowed local authorities would get much bigger, and the Government's task of calculating, equalising and redistributing resources would therefore be much more difficult. 
 The purpose of my remarks is to probe the Government on how they would respond to that situation. They may find the arguments for the amendment intellectually persuasive, but it would have difficult administrative implications. How would they respond in distributing the grant, making judgments about resources and equalising those resources? The implications go way beyond any superficial argument about the fairness of the system.

Desmond Swayne: It is wise to be aware that when properties were last revalued and placed in their current bands, the housing market was in the teeth of a recession, and prices were falling. Now houses stand to be revalued and rebanded, and those that would have been regarded as modest are very expensive and will be rebanded accordingly. How does the Minister see rebanding taking place? I invite him to speculate, and not to say that the matter is still entirely to be decided. Indeed, there has been much discussion, including in the Committee today, as to how that rebanding might take place.
 I am aware of suggestions that the most likely new band threshold is to be £250,000, which is currently in the middle of band G. That would have a severe impact in the south-east, and certainly in my constituency, where £250,000 buys only a modest three-bedroomed house. The heaviest punishment, I suggest, is likely to be reserved for those houses in the current top band H, which are worth more than £320,000. A decade ago, such houses would have been at the top end of the market, but that is no longer the case in my constituency. Such people will find themselves rebanded in very expensive bands. 
 It is all very well Labour Members nodding and saying, ''The more expensive the houses, the more people ought to cough up,'' but no additional income and no additional ability to pay come from living in a more expensive property. The only person who benefits and generates more ability to spend as a consequence of rising house prices is the one at the end of the chain who is selling a house, but not buying another. Simply living in a property whose value is appreciating does not generate any additional ability to pay, which returns us to the point that the proposal was never intended to be a pure property tax. 
 As the debate has proceeded, I have found enlightening not so much what has been said, although that in itself has been quite enlightening, but sedentary comments from Labour Members, such as the whispering about the rich and protecting their interests. [Interruption.] Yes, we did hear it, I say to the hon. Member for Colne Valley (Kali Mountford). Is it not interesting how quickly the veneer of new Labour has disappeared? Real, old Labour is there again, complaining about the rich. Labour Members should be aware of the fire with which they are playing. 
 I recall the mid-1980s, when the constant complaint of middle England was the rates—the property tax. Precisely to try to deal with that huge discontent, we introduced the poll tax. It was an enormous mistake, although it was an attempt to address that problem. Of course, the Scots always complain that they were the human experiment as the poll tax was implemented in Scotland first. The reality is that the poll tax was introduced in Scotland first because the rating revaluation was due there. Avoiding an expected explosion of discontent consequent on a rating revaluation led to what I accept was a mistaken experiment. 
The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Mr. Christopher Leslie):
 The hon. Gentleman is helping us with the context as to why the poll tax was introduced. Is he suggesting that those who introduced it were well meaning and well intended in doing so?

Desmond Swayne: Absolutely. Of course, the issue was the level at which the poll tax was set, which was unsustainable in many areas and led to an enormous revolt—precisely the revolt that the reform was designed to put off. However, consider what Labour is doing. These changes will hit with their full magnitude in 2007, and people who have already had council charge increases of 40 per cent. under this Government—that is equivalent to 2p on the basic rate of income tax without increased ability to pay, which does go with an income tax increase—realise that they will face the whirlwind that Labour is sowing simply because they live in a more expensive house. That is precisely what the Government are doing with these changes: middle England will explode as a consequence of what they are planning to pile on.

Patrick Hall: Does the hon. Gentleman not realise that what he is saying in arguing against regional variations is that everyone in band A will suddenly find themselves in band E as a result of revaluation without any other reforms? He has already referred to his constituency in terms of the cost of a modest three-bedroomed house. How will that assist his lower-income and middle England constituents?

Desmond Swayne: To an extent, it is for the district council that levies the rate—or the country council in my area—to adjust the rate across the bands. The reality is that we shall have an enormous consequential change as a result first of the revaluation and, secondly, the proposed rebanding. We want to hear more about that. We will be back to the problems of the early 1980s. Since 1991, we have had a consensus. By and large, people have paid up and not grumbled about the unfairness of the situation. The system is not yet broken, but Ministers are proposing to fix it good and proper according to the arrangements under discussion. They may rue the consequences of such action.

Robert Syms: The present system is probably better than most of the alternatives. Local government and a way in which to raise money—which is never popular—is always a difficult system to devise. I was always a great fan of the rates system. Modest reform in that direction would have been better than the direction in which the Government whom I supported went, which was towards a system that was designed by people who had no understanding of local government.
 As my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) said, the ability to collect it is good because it relates to property and that does not move or hide, so there can be a high yield. The compromise of a 25 per cent. discount for single people pays regard to the ability to pay. The system is moderately progressive in that the top rate pays a ratio of 3:1 in relation to the bottom rate. Therefore, most people accept the differentials that people in larger houses should pay more than those in smaller houses. 
 We must bear in mind that the charge is for using local services, and sometimes the number of people in a household determines how many local services are used rather than the size of the house. If we consider the system in the round, it works fairly well. Although I receive many letters from people moaning about the level of band D, or whatever band they are in, few people campaign to change the system wholesale. It has certain weaknesses, such as the gearing effect, but the only way to change that is by giving business rates back to the local authorities. It was decided previously to give certain guarantees to the business community. At present, this Government are probably taking the same action. As long as business income is kept out of the equation and only about 20 to 25 per cent. comes from local payers, there will be a gearing effect that will exaggerate matters. That is regrettable, but I cannot see another alternative. I certainly do not favour local income tax. 
 The system works well. The only question is whether to vary the bands or introduce more bands to make the system slightly more progressive. Ministers would have to be brave and courageous to do that because most people who look forward to change think that they may benefit from it. Expectations could be built up if ideas for change were put forward that could not necessarily be delivered. One of the nails in the coffin of the Conservative Government was the poll tax regime. Further changes were made to the VAT regime to offset that, which, in turn, radicalised people on VAT. That was one of the major factors in our heavy defeat in 1997. The party had forgotten the lesson of 1929, when we reformed the rating system to derate a lot of industry. The bills went through letterboxes in 1929 during a general election campaign, which led to the second Ramsay MacDonald Government.

Edward Davey: Before the hon. Gentleman moves too far about from his point about local income tax, what does he have against a tax that is related to the ability to pay?

Robert Syms: I have nothing against using an ability-to-pay system if it is done on a national basis. That is the fairest way to do it and it is perfectly legitimate for the national Government to make taxation progressive through national income tax. There would be many problems with implementing it on a local basis; the national approach is far better. I accept a degree of progressive taxation—but only a degree—in paying for local services, but it would be much better delivered by the Chancellor and by national policy.

Edward Davey: I do not know whether the hon. Gentleman has studied local income tax in Canada, America, Australia, Sweden, Finland, Denmark, Belgium, Holland, Norway and several other countries. Does he see any problem with the way in which it works in those countries?

Robert Syms: I plan to visit all those countries in future to study them. I was in Finland a few months ago where I know that local government plays a much greater role. Countries have different constitutions and different systems; we have always had centralised
 government. If taxation is to be progressive, and wealth is to be redistributed, it is legitimate to do so on a national scale, rather than try to micro-manage it at a local level. The system that we have works well. It is up to the Government to set out the case for major change. Eight bands are certainly sufficient.
 Changes either at the top or the bottom would cause howls of outrage and could undermine the acceptance of the system in the process. There will be moans and groans this year, largely as a result of the settlement, particularly from my area of the country, but, broadly speaking, we have a system that works. When a system broadly works, even with a few difficulties, it is best to leave it alone and look for something that is not working. If the Government are really intending to stir the pot, I wish them well and, as a vice-chairman of the Conservative party, I shall look on, smiling quietly.

Patrick Hall: I have listened carefully to the hon. Gentleman's comments. He describes the present situation, but I invite him, if he is not intending to do so, to consider the situation after revaluation. That is when the big differences will become apparent.

Robert Syms: The bands are relative to each other and the point of a revaluation is to raise the same amount of money. There may be changes because of property prices and other changes. Whenever there is any revaluation, Governments try to have smoothing arrangements to offset some of the biggest difficulties. I am not yet convinced of the arguments for change. The hon. Gentleman has argued that there should be more substantial change, but I am concerned that this part of the Bill puts the Government in a position in which they may make a system that is not designed to be progressive. If it were more progressive, it may undermine the wide acceptance for the system. I wish them well, but I would not support it.

Christopher Leslie: It is interesting that we have heard some reasonable speeches from Conservative Back Benchers, although I disagree with some of their content. We have had some forceful—not rabid, but slightly over-enthusiastic—comments from Conservative Front-Bench Members. I apologise to the hon. Member for Cotswold for including him in that category, but some of his comments were a little bit near the edge.
 We must put the amendments in context. Section 5 of the Local Government Finance Act 1992 provides for eight valuation bands, lettered from A to H, with band values differing between England and Wales. Section 5(4B) gives the Secretary of State the power to substitute new bands for existing bands. Clause 78 will amend the section by inserting a new subsection that makes it clear that the Secretary of State can vary the number of bands at the time of revaluation. The Government recognise the concern that the current bands are not sufficiently fine-graded to reflect differences in value at the top and bottom ends of the property market. The clause makes it clear that further bands could be added without new primary legislation. 
 My hon. Friend the Member for Bedford suggests in his amendment that we should have the ability to make regional variations in the application of the banding structures and so forth. Indeed, it is similar to amendment No. 163. I say to my hon. Friend and to the Committee that the amendments in this group are unnecessary because we already have sufficient powers under the Local Government Finance Act 1992 to cope with some of those issues, should we choose to do so. 
 The powers to change council tax bands or the proportions between them are exercised by order under section 5 of the 1992 Act, whose section 113(1) makes it clear that powers to make orders may be so exercised as to make different provision for different cases or different descriptions of cases, including different provision for different areas or for different authorities. So, to a large extent, the sentiment of what my hon. Friend is trying to achieve is covered in existing legislation.

Paul Goodman: Given that the Under-Secretary has just said that he has the power to do what the hon. Member for Bedford wants him to do, does he intend to do it?

Christopher Leslie: That is the second part of my brief contribution. No, I cannot say what the Government intend to do. We feel that it is rather too early, long before revaluation has come along, to say what banding arrangements could be, what the gaps between bands could be, how many bands we might choose to have and what the cash limit on bands could be. All those are issues that we could face. Indeed, as the right hon. Member for Skipton and Ripon pointed out, they are all issues on which we may choose not to proceed. He made a strong case for no change, and I shall bear his advice in mind, as will my right hon. Friend the Minister for Local Government and the Regions.
 The hon. Member for Southport asked a number of questions. I can certainly say that revaluation and, indeed, changes in the banding structure will not be about increasing the tax take. Our concerns will be fairness, equity and ensuring that, to a large extent, we retain a local taxation system that is seen to be as fair as possible. I believe that it is possible to improve the council tax regime, and we intend to do that. I agree that those on the lowest incomes, and perhaps those in lower-value properties, have no great cause to fear change. If that is the main point that he wants to secure, I can certainly say that I share his thoughts on it. 
 The hon. Member for New Forest, West (Mr. Swayne) helpfully reminded the Committee of the recession, negative equity and falling house prices of the early 1990s under the Conservative Administration. I am grateful to him for that, but I am not sure about where he found his speculative figures about £250,000 and house price banding. We have not come to any conclusion or made any decision on those matters. He suggested that there should be no change to council tax, but he must acknowledge that circumstances could arise, whether through 
 revaluation or the process of time, in which we might need to consider adjustments to council tax to make it more fair and equitable.

Desmond Swayne: Is the Under-Secretary seriously suggesting that his Department is an ivory tower and that it said, ''Wouldn't it be nice to have the power to alter the bands,'' without considering any modelling as to how to go about that?

Christopher Leslie: My Department is certainly not an ivory tower, but the hon. Gentleman is perhaps living in another realm of the imagination—cloud cuckoo land—if he is suggesting that he has no alternative concept of how we might make the local taxation system fairer and more equitable. We are considering all options, which is why we want flexibility in the legislation. However, until we have the revaluation so that we can see how situations are changing, it is surely best not to draw conclusions too soon.

Edward Davey: I congratulate the Under-Secretary on leaving scope for the Government to be flexible in their attitude to local taxation, particularly as was shown in the terms of reference to the balance of funding review, in which it is clear that the Government could consider replacing council tax with local income tax.

Christopher Leslie: I am delighted that the hon. Gentleman has got on to his favourite subject, local income tax. His enthusiasm shines through at all stages. He advocates local income tax while we like to keep our minds open on all suggestions as they come. I can see all sorts of disadvantages to a local income tax. His Liberal authority, which perhaps covers a high-income area, may be keen, but other Liberal authorities such as those in Liverpool or elsewhere, where incomes are not particularly high, may be worried about how much income they could generate from it. I am sure that we can speculate on those issues at length. It would be interesting to see whether the hon. Member for Southport has thought through some of those matters.
 The hon. Member for Cotswold took a few pot shots at the Government, claiming that our proposals would somehow damage authorities' income. He fails to recognise the level of revenue support grant that goes to local authorities. Indeed, the fact that we have increased our funding towards local government by 25 per cent. in real terms since 1997, which compares with the cut that his Administration instituted, overcomes his criticisms. He made various points about mobile homes or homes in low-demand areas. We are aware of concerns of those living in the band A property designation. We are committed to listening to the views of taxpayers and others to help to inform our final decisions on changes, if indeed we make any. 
 That also applies to those questions affecting those at the top of the scale. Questions were raised about band H residents. Those account for less than 1 per cent. of the total number of dwellings so there is doubt as to whether there would be a significant increase in the number of properties affected if there were new bands above band H. I hear some of the points that have been made, particularly by the hon. Member for New Forest, West who was worried about those in expensive properties. I think that I have managed to cover most of the points that have been raised by the 
 Committee. I hope that my explanations about our capabilities and the scope of existing legislation will persuade my hon. Friend the Member for Bedford not to press his amendment.

Geoffrey Clifton-Brown: I am concerned. I was not going to put this on the record, but I had written a longish speech on the amendment tabled by the hon. Member for Bedford. I did not give it because I felt that the amendment was unlikely to come to pass. Now the Minister says that he has powers under section 112 of the Local Government Finance Act 1992.

Christopher Leslie: The hon. Gentleman means section 113(1) of the Local Government Finance Act 1992, which, of course, was passed by the previous Conservative Administration.

Geoffrey Clifton-Brown: I am glad that the Minister has confirmed that he meant section 113, because section 112 was abolished by the Local Government etc. (Scotland) Act 1994. Section 113 states:
''Any power of the Secretary of State or the Treasury under this Act to make orders or regulations (other than the power to make orders under section 54(6) above) may be so exercised as to make different provision for different cases or descriptions of case, including different provision for different areas or for different authorities.''
 Indeed, the Secretary of State has the power to raise different council tax bands for different regions. That is why I have begun to become really alarmed. Regional variation makes no sense whatsoever. Whatever one's view on regional bodies—we do not support them—all the hon. Members who support the amendment come from the southern, eastern and north-western regions which are diverse. The amendment would give rise to enormous numbers of anomalies and to unfairness.

Edward Davey: Can the hon. Gentleman explain why his Government passed section 113(1) of the Local Government Finance Act 1992, if it was not to allow variation?

Geoffrey Clifton-Brown: Even if they passed it, they never used it.

Christopher Leslie: Let me make it absolutely clear that I am giving no indication that we will use that provision either. All I am saying to my hon. Friend the Member for Bedford is that the capacity and the flexibility to do that exists.

Geoffrey Clifton-Brown: It does exist, and the Government have highlighted that fact. We are discussing an amendment tabled by a Government Back Bencher, which may indicate that the Minister is trying to widen the Government's agenda. It is an old and well-used tactic to have a Back Bencher raise an amendment when there is no intention of implementing it at a particular time, but which may be implemented in the future. I am becoming more suspicious the longer the debate goes on.

Paul Goodman: As my hon. Friend said, the key point is not what is written in 1992 Act, to which he referred, but the Minister's answer to the points raised by the hon. Member for Bedford? The Minister cannot rule out the possibility that he will use the powers
 granted to him under the 1992 Act in exactly the way that my hon. Friend has described.

Geoffrey Clifton-Brown: The plot thickens—I will make that clear in a second. I am grateful to my hon. Friend for his helpful intervention. As my right hon. Friend the Member for Skipton and Ripon said—

Christopher Leslie: Will the hon. Gentleman give way?

Geoffrey Clifton-Brown: May I develop the point a little further? The council tax is simple and easy to collect—that is one of the main dictums of tax law. Provision for different bands in different regions would remove that advantage. What would be the effect of different sets of bands on properties either side of a regional boundary? The effect may be the distortion of house prices in one region at the expense of another.

Christopher Leslie: I am listening to the hon. Gentleman's argument. He suggests that it would be wrong to have the power to apply changes in the banding structure to a billing authority or any number of billing authorities. If that is the case, why did he move amendment No. 163, which would achieve precisely that?

Geoffrey Clifton-Brown: As the Minister knows perfectly well, that amendment was a probing amendment. As I have already indicated, the plot thickens and he will begin to see why we moved that amendment. One can envisage a time—[Interruption.] If hon. Members will listen, they may find out why I am so concerned and they may become concerned too.
 One can envisage a time when the council tax will be used as a mechanism for raising a regional council tax. How else would the regional bodies be funded? The amendment raises the question whether the regional body, rather than the county council, would become the precepting authority that sets the rates and whether the local authority would become the billing authority.

David Curry: It could not be the county council, because county councils will not exist under the regional system.

Geoffrey Clifton-Brown: Precisely. My right hon. Friend is perceptive—that is precisely why what I have suggested may happen. That is exactly right. One could imagine that changes may be used as a property wealth tax mechanism to penalise higher-value rural property in favour of lower-value inner-city properties. That would further strain the rural-urban relationship, and it would be unfair. Council tax is regressive; it does not necessarily reflect ability to pay. For example, pensioners' income may have dropped but they may still live in a large house. I think that the amendments, particularly that tabled by the hon. Member for Bedford, raise all kinds of implications. We all have great difficulty with those, and I urge my colleagues to vote against the clause, because it ought to be taken out.

Patrick Hall: We have had an interesting, informative and sometimes entertaining debate about an issue that is important to our constituents. For the record, I make it clear that no one made me contribute to the debate and no member of the Government asked me to table amendments. None the less, the debate has triggered anxiety on the part of the hon. Member for
 Cotswold, whose self-confessed suspicious mind has focused on issues that show where the Conservative party stands, rather than illuminating what I think constituents are concerned about regarding the future of the council tax.
 The debate concluded with the encouraging news from my hon. Friend the Under-Secretary that the power to introduce regional variations already exists, and that that option is available to the Government. My hon. Friend's comment was clearly made without any commitment for the future, but he is open-minded about the possibility of considering that initiative should it prove necessary. That is what I was looking for when I tabled my probing amendment. I sought to put down a marker on the record, and we have the Minister's response on the record, so I shall not press my amendment.

Geoffrey Clifton-Brown: I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Geoffrey Clifton-Brown: I have a simple, short question for the Minister. Why is the clause necessary when he has already referred to section 5(4) of the Local Government Finance Act 1992, which appears to give the Secretary of State all the powers that are in the clause? I wonder whether it, and the debate that we have been having for the last hour and half, is not otiose. Section 5(4) of the 1992 Act says:
''The Secretary of State may by order, as regards financial years beginning on or after such date as is specified in the order—
(a) substitute another proportion for that which is for the time being effective for the purposes of subsection (1) above;
(b) substitute other valuation bands for those which are for the time being effective for the purposes of subsection (2) or (3) above.''
 If the Secretary of State already has that power, why is it given in the clause?

Christopher Leslie: As I explained in the debate on the amendment, the clause makes sure that we can, henceforth, vary the number of bands at a time of revaluation. The current provision, in the 1992 Act, is for eight bands, and we seek to establish, beyond doubt, the flexibility to vary that number, notwithstanding the fact that we have not made any decisions about whether to use it.
 Question put, That the clause stand part of the Bill:—
The Committee divided: Ayes 14, Noes 5.

Question accordingly agreed to. 
 Clause 78 ordered to stand part of the Bill.

Derek Conway: We may be sitting a couple of hours beyond the rising of the House, which is always a morale-boosting occasion for any Committee, so in about an hour we will suspend for 20 minutes for a comfort break, and then resume for the final couple of hours. I hope that we will make a little more progress.Clause 79 Transitional Arrangements

Clause 79 - Transitional Arrangements

Geoffrey Clifton-Brown: I beg to move, amendment No. 164, in
clause 79, page 39, line 41, at end insert— 
 '(d) make provision for any scheme made under subsection (1) above to only apply for the two financial years following the compilation of a new list.'.
 Clause 79 introduces transitional arrangements into the council tax system. This has the potential to complicate the calculation and hence understanding of council tax liabilities for taxpayers. The amendment stipulates that any transitional arrangement scheme must be completed within two years of the compilation of new domestic property valuation lists. This is a sensible amendment. Nobody wishes unduly to complicate the system of council tax collection: it is relatively simple to understand and has very high rates of collection. 
 I have already made it clear that transitional arrangements in relation to non-domestic rates can create horrendous complications, because several sets of transitional arrangements operate at the same time. In some cases there may also be previous sets of transitional arrangements—which may be different from the present set—still waiting to be determined on appeal. 
 One of the main purposes of the amendment is to ensure that transitional arrangements will be phased out within two years over a revaluation cycle. There would then be no chance of the transitional arrangements spanning one valuation cycle into the next, even if it were brought back from five to 10 years as we were discussing earlier. 
 Finally, does the transitional arrangement have to be self-financing, or can it be financed elsewhere from departmental and Government resources?

Desmond Swayne: To reinforce what my hon. Friend has said, clearly the key issue is whether the transitional arrangements overlap. When they do, this increases the costs of billing authorities, the cost of the tribunal, and therefore the cost to taxpayers. As one set of transitional arrangements arises with a revaluation list, the previous set should expire. There would still be outstanding appeals thereafter, but this would overcome the main problem. It is a simple and self-evident amendment, and I am sure that the Minister will accept it.

Christopher Leslie: I am sorry to disappoint the hon. Gentleman, but the Minister is not going to accept the amendment. Clause 79 allows a transitional relief scheme, which requires the gains from council tax revaluation for band changes to contribute towards
 conditional relief for those whose bills will rise from the valuation band changes. Amendment No. 164 is unnecessary. It would amend proposed new section 13B, which clause 79 inserts into the Local Government Finance Act 1992, to provide the transitional arrangements to apply for only two years after the council tax revaluation. A transitional scheme would be allowed to exist for only two years.
 If we were to give the Opposition Members the benefit of the doubt, we might suggest that they have missed proposed new section 13B(3)(b) which allows changes to be 
''smoothed over . . . one or more financial years''
 following revaluation. It already allows transitional arrangements to last for only two years after each revaluation, if that is what the Government and the National Assembly for Wales decide they want, while the amendment, if we take it at face value, suggests that transitional relief should be for only two years. I am worried that to enshrine that principle in the Bill would be harsh on those facing new bills and that the two-year phasing could be steep for people to bear. When the Conservative party introduced council tax it proposed a three-year transitional scheme at the outset, so I cannot see the logic of truncating that transitional process to ensure that it is phased over a shorter period of time. 
 We should keep our options open. The framing of new section 13B(3)(b) gives us an opportunity to look at the period for the transitional arrangement. That is the best approach to take; to make sure that we bear in mind that the phasing of a new system may need two years or longer, but not to write in the Bill that it must take two years. I hope that with that clarification hon. Members will see the error of the amendment and that the hon. Gentleman will seek leave to withdraw it.

Geoffrey Clifton-Brown: It is a bit rich for the Under-Secretary to say that transitional arrangements for only two years would cause hardship when this Government and their local government finance settlement have caused double-digit increases in council tax—40 per cent. over the past four years. If anything is causing hardship it is that.
 The Government are wrong on the matter. The transitional arrangements should be just that. Will the Under-Secretary tell the Committee, before we decide whether to vote on the matter, how long he expects the transition to last—if he does not like two years, what does he like?—and whether it will be self-financing or financed from elsewhere within the Government budget?

Christopher Leslie: I should have answered the point raised by the hon. Member for New Forest, West. We envisage that transitional schemes will be self-financing. That is an important principle: as for business rates, so too transitional arrangements for council tax should be self-financing. I cannot say at this stage what the transitional time span should be. We may want two, three or four years. We have not come to conclusions on the matter and we will look at the circumstances at the time. But it would be foolish
 to be so rigid and suggest that two years should be the definitive period. It could be harsh; we do not yet know the effects of revaluation. We should retain as much flexibility as possible in the statute.

Geoffrey Clifton-Brown: There is just a glimmer of hope. At least the Government will have the power to determine how long the transitional arrangements last. The Government and others looking at our proceedings will have heard the point, so I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 79 ordered to stand part of the Bill.

Clause 80 - Amendments relating to distress

Question proposed, That the clause stand part of the Bill.

Desmond Swayne: On 31 January I received a letter from a resident in Ringwood drawing to my attention cases affecting his daughter and his son, who live under different local authorities. They reinforce my experience of the past six years in dealing with a dozen similar cases where the complainant has written to say that all of a sudden, out of the blue and without any previous correspondence they find themselves threatened by bailiffs. This has always occurred under local authorities other than my own. The tenants have come to live in my constituency with the problem hanging over them.
 In every case, after remonstrations the local authority has backed down and admitted it was a case of mistaken identity or that the money demanded was not in fact due. Will the Under-Secretary tell me whether anything in the arrangements he has put in place would alleviate that problem? Will the arrangements ensure that local authorities are more careful about instigating the proceedings, and that they check, correspond and examine the cases before they reach the threat of enforcement, the bailiffs and property being sold?

Geoffrey Clifton-Brown: We believe that clause 80 is unfair and unreasonable. Distraint of someone's goods—household items—is a way of enforcing payment of a debt. The bailiffs are sent in to remove people's furniture.
 The clause says that if the bailiffs, for whatever reason, fail to find any or sufficient goods to pay the amount of the debt owing—[Interruption.] Government Members may laugh, but some of their more unfortunate and poorer constituents might be caught up in the provisions of the clause. If the bailiffs fail to find any or sufficient goods to pay the amount of council tax owing, the cost of sending in the bailiffs, which can sometimes be substantial, must be added to the attachment of earnings order. 
 Many of the people in cases of non-payment who would be affected by the provisions are on very low incomes. They may be unable, because of their circumstances or education, to present a case to the authorities as to why there should be no distraint on them, or why they have no goods if, for example, the goods belong to someone else in their family. In that 
 sort of situation, the billing authority should be given some discretion to waive the costs. The clause will generate hardship and cause oppressive behaviour. Will the Minister think again and allow some discretion to be used? 
 All members of the Committee should sit up and take note of what the Government seek to do in the clause. I hope that, having examined it closely, they will vote for the clause not to stand part of the Bill, unless the Minister gives an indication that he will allow some discretion to be used in cases of severe hardship.

Edward Davey: There is always a first in a Standing Committee, and this is a first for me, because I have been provoked by the hon. Member for Cotswold into affirming what he has just said.
 In my constituency, there are a number of examples of people having failed to pay debts for various reasons. In most cases, those debts have not been owed to the local council but to agencies such as the Driver and Vehicle Licensing Agency, or to private companies. Bailiffs have arrived and behaved in a disgraceful way, because they have wide-ranging powers to seize property. Often, when one looks at individual constituents' cases, one finds that the debtor's ability to challenge the bailiff is very limited. The bailiff can seize property that is owned not by the individual debtor but by a family member. Moreover, the bailiff can make additions to the bill that are disproportionate to the principal sum that was owed. 
 I support the hon. Member for Cotswold in questioning the Minister on this matter. If the Minister is giving bailiffs powers in relation to the collection of council tax debts that are equivalent to the powers that they have for the collection of other debts, we in the House should be worried. 
 Debt collection is an area of law that is in desperate need of reform, so that fair and due process can take place and be seen to take place. Until that reform occurs, I am reluctant to vote for a clause that would give local authorities extra powers in relation to council tax debts. If the Government were to introduce reforms to make the debt collection process fairer and more transparent, there might be a case for those extra powers, but until those reforms occur I do not believe that the House should agree to the increased powers.

Robert Syms: Bailiffs are getting a bad press. At the end of the day, local authorities are charged with collecting money to provide decent public services. Some people who pay their bills are not very well off. Despite the occasional hardship case, however, the truth is that some people simply do not like paying bills, and fall through the system. If the costs do not fall to the people who do not pay their bills, they fall to general taxpayers who are already doing their duty by paying what they should be paying. I therefore have reservations about my hon. Friend's amendment, which I hope is probing.

Geoffrey Clifton-Brown: First, may I correct my hon. Friend? As I understand it, we are speaking to clause
 stand part. Secondly, we are talking only about the costs of the bailiff's operation, which there is no discretion to waive. There may be good reason why bailiffs have not been able to recover the debt. The furniture may not belong to the person, for example—but they will still charge those costs on an attachment of earnings order, which is unfair.

Robert Syms: My hon. Friend's point still returns us to the principle that people must pay their obligations. They are using local services, whether or not they have assets. Local authorities try as far as possible to avoid sending in the bailiffs because of the costs and the aggravation, but if all the procedures to send them in have been gone through, people who are not paying their bills should carry those costs. Local authorities have powers to write off debt in cases when someone is deceased or there is some other problem.

Edward Davey: I sympathise with the hon. Gentleman's point that some people do not like paying their bills, and that we should show them no quarter. During my investigation of several of my constituents' cases, bailiffs have told me that the law on debt collection needs to be reformed because some bailiffs behave outrageously and give their profession a bad name. There is clearly a need for bailiffs and for debt collection, but there is also a need to ensure that we drive out bailiffs who go beyond reasonable process.

Robert Syms: The hon. Gentleman makes a good point. I am sure that there are good and bad bailiffs, and this area may be ripe for reform. Unfortunately, it is not one of the matters to which we must confine ourselves to discussing today. We have the rest of the Bill to consider. There are always people in life who will string a local authority along, and if that authority must pay the cost, that cost falls to the general taxpayer, who has already done his duty.

Paul Goodman: My hon. Friend the Member for Cotswold was saying that the problem with the clause was that it did not allow any flexibility on the cost of the bailiff's visit. If I understood my hon. Friend the Member for Poole (Mr. Syms) correctly, he said that the local authority had the power to write off the debt, which would provide the element that my hon. Friend the Member for Cotswold wants. Is that right?

Robert Syms: That is right. One cannot get blood out of a stone. There comes a point when local government officers must say, ''We have not collected this debt. It has been outstanding for two years, and we cannot find the person. We will write off the debt if there are special circumstances.'' There is the ability to do that, but it is more transparent and honest to put a cost on it so that the local authority can see what bad debt has cost them when they examine the books. The cost of sending in the bailiffs is then put in that pocket rather than allocated to something else.

Christopher Leslie: The contribution made by the hon. Member for Poole has been reasonable and considered, and he has covered some of the points that I would have wanted to make. That is a credit to him, although it reflects badly on his Front-Bench colleagues.
 The clause enables the costs incurred in trying to levy distress, which involves bailiffs taking legal control of a debtor's goods, or costs incurred during an abortive committal hearing to be recovered in an attachment of earnings order. The first step by a council in trying to recover a debt is to obtain a liability order, and councils can then take several further steps. They can levy distress through bailiffs' activities or take out an attachment of earnings order, which is the preferred vehicle for many local authorities that feel that it is a fair way of securing a debt. 
 The problem is that if local authorities start levying distress or committal warrant processes but then discover that they could have taken out an attachment of earnings order, they cannot retrospectively recover the costs of levying the distress or issuing the warrant. Clause 80 remedies the situation and enables the costs to be recovered. It also allows regulations to require billing authorities and bailiffs to supply information to debtors when they have levied or attempted to levy distress. There are information provisions in the remainder of the clause. 
 The hon. Member for New Forest, West asked how we are encouraging local authorities to get their administration right in the recovery of debt. The point of our comprehensive performance assessment and modernisation and improvement agenda for local government is to improve not only the delivery but the administration. We want to avoid maladministration, whether it is in the pursuit of debts or anything else. We have a system of ombudsmen, through which complaints can be pursued. It is working well, but we must continue to bear down on maladministration. 
 The hon. Member for Cotswold asked what discretion authorities have in cases of hardship. We give authorities ample discretion, and the hon. Member for Poole rightly pointed out that authorities may decide whether to send in bailiffs. They can take other action through attachment of earnings orders, and the clause does not change an authority's discretion. It simply ensures that some of the sums can be recovered through an attachment of earnings order. Both councils and courts can be reasonable in the processing of many of the orders. 
 We can envisage the circumstances raised by the hon. Member for Kingston and Surbiton (Mr. Davey), who was concerned about debtors who fall on difficult times. We need to consider such circumstances and constantly review our enforcement procedures and issues. The Lord Chancellor's Department is responsible for many of those issues, but we need to ensure that we are careful with our enforcement procedures.

Geoffrey Clifton-Brown: Can the Minister give us an idea of the scale of the problem? My right hon. Friend the Member for Skipton and Ripon said that in many cases, local authorities were collecting almost 100 per cent. of the council tax. If he is right, unless there is huge variation in the levels of collection through the country, we are dealing with a small problem. If the
 Minister cannot give us any idea, will he write to us to set out the last known level of unpaid council tax for each authority?

Christopher Leslie: I have a feeling that those figures are in the public domain, not least because I have recently signed off many parliamentary questions about them. Levels of council tax collection have improved immeasurably under our Administration, not least because of the support that we have given to local authorities. The problem is not widespread, but circumstances may exist in which some of the costs need to be recovered. The hon. Member for Poole pointed out that it would be unfair for the costs to fall on the general council taxpayer, who will already have contributed to local revenues. Therefore, although it is not a widespread problem, we needed to close the loophole in the regulations.
 Question put and agreed to. 
 Clause 80 ordered to stand part of the Bill. 
 Clauses 81 and 82 ordered to stand part of the Bill.

Clause 83 - Major precepting authorities: combined fire authorities

Question proposed, That the clause stand part of the Bill.

Geoffrey Clifton-Brown: I could not let you get on to too much of a roll, Mr. Conway. We might dispose of large chunks of the Bill too quickly.

Desmond Swayne: And then we would not be able to come back for two hours.

Geoffrey Clifton-Brown: Indeed. [Interruption.] Does my right hon. Friend the Member for Skipton and Ripon wish to intervene?
Mr. Curry indicated dissent.

Geoffrey Clifton-Brown: I have two simple questions. The clause relates to precepting, but will it give fire authorities any other power, and do the Government have any plans to designate other precepting authorities, such as regional bodies?

Christopher Leslie: The answer to both questions is no. Clause 83 simply adds combined fire authorities in England to the list of major precepting authorities. The constituent authorities that make up a combined fire authority currently contribute to its expenses in proportion to their council tax base. Under the proposed arrangements, a combined fire authority could issue a precept for each financial year to the billing authorities in its area.
 Question put and agreed to. 
 Clause 83 ordered to stand part of the Bill.

Clause 84 - Amendment of section 67 of the Local Government Finance Act 1992

Question proposed, That the clause stand part of the Bill.

Geoffrey Clifton-Brown: The clause amends section 67 of the Local Government Finance Act 1992 so that a full council meeting will no longer be required to adopt the council tax base used when setting council taxes. Why has the Minister included the power under the Bill? Council tax should be set during a full meeting of the council, and I can think of no reason why that should not be the case. If it is not, given the cabinet-style government in many authorities, general members not in the cabinet will have less and less to do. I would be grateful if the Minister gave an explanation for the clause.

Desmond Swayne: I have a confession: although I fought a district council election, a county council election and a London borough, I was never in any danger of winning, so I have never sat on a council, and I do not know what significance a full meeting of the council has. However, when such an important financial decision has to be made, it is preferable that the issue should be brought before the whole council, rather than some committee. I admit that I do not have any expertise in the matter, but I am interested to hear why the Minister would change the existing system. I do not want to hear the bland answer that this is a deregulating measure giving local authorities more power to do what they want instead of what has been done in the past. Presumably, there were good reasons for doing things as they were done in the past.
Mr. Leslie indicated dissent.

Desmond Swayne: The Minister says that there were not, but we will soon discover whether that is the case.

Edward Davey: The hon. Members for New Forest, West and for Cotswold may be labouring under a misapprehension. The provision does not refer to removing the need for a full council meeting to set council tax. It gets rid of the obligation for a full council meeting to decide what the council tax base is. There is a significant difference. In many ways, the measure is very minor.

Desmond Swayne: I accept what the hon. Gentleman says. It is certainly a less important measure, but I am not sure that I would go so far as to say that it is very minor. It would be interesting to hear the Minister's view on what should require a full council meeting. We would like to be taken into the deliberations that led to the clause being included in the Bill, instead of hearing the pure nonsense that we have heard so often in Committee, that the Bill is all about letting councils do whatever they please. The reality is that the Government are riding roughshod over councils in any matter of importance. Perhaps the clause is a deregulating measure on a matter of relatively little importance in contrast to the rest of the Bill.

Edward Davey: Stick that in your pipe and smoke it.

Christopher Leslie: Indeed, one is tempted to do so, but not in Committee, where smoking is not allowed—nor should it be.
 Clause 84 is simple. Although our wide agenda includes removing red tape, regulation and the burden of bureaucracy from local authorities, part of it is to give more freedom and flexibility to local government. 
 I am surprised that the Opposition questions and queries that. 
 As the hon. Member for Bristol, West pointed out, we are discussing whether a full council meeting is necessary to set the council tax base, which is really only an accounting device used to make budgetary judgments about the final council tax figure, which is decided by a meeting of the full council. Accountability can be fully exercised under that system. All local councillors can be involved in the setting of the council tax figure.

Desmond Swayne: I accept what the Minister says, but how did that situation come about? Was it entirely by accident or by omission? Presumably, there was some logic—[Interruption.] I believe that the cavalry has arrived.

Christopher Leslie: I will tell the hon. Gentleman why the measure was introduced, although I will have to second-guess the Conservative Administration of 1992.

Desmond Swayne: Oh, we are to blame.

Christopher Leslie: Yes, the hon. Gentleman has hit the nail on the head. His party is to blame for this piece of red tape and bureaucracy, which weighs down local authorities throughout the country. We seek to provide relief by freeing them from those shackles. I suspect that the Conservatives introduced the measure after the poll tax when the council tax was first introduced, so that the full council would take responsibility for the new council tax procedures and arrangements. It was probably felt that the full council needed to be included in the setting of the tax base. We believe that it is not necessary.

John Pugh: I have attended council meetings in which we have been through the rigmarole, argued hard decisions about the budget, and then been completely bewildered when, at the end of the proceedings, a document is handed round that barely anyone in the room understands.

Christopher Leslie: I am sure that the hon. Gentleman understood the document and that in his local authority he would not vote on anything that he did not understand. I, too, took part in meetings about the council tax base when I was a councillor on Bradford metropolitan council. Councillors could claim their attendance allowances, and I was concerned that the council had to go to the expense of a full meeting simply to set the council tax base. Not only will the reform in the clause lift the burden from local authorities, but it will probably save money.

Geoffrey Clifton-Brown: I put it to the Minister that setting the council tax base on which the council tax is set is an important matter. If the Minister will listen for a second, I will explain. There was a good reason for including the power in the Local Government Finance Act 1992: it was included so that every councillor had an opportunity to spot minor additions and errors. If we are not careful, the same thing will happen in local councils that happens when estimates are scrutinised in Parliament, which is that errors creep in because Members of Parliament do not understand what is going on and they rush through the estimates
 in about half an hour. Local councillors should at least have an opportunity to summon a full council meeting. The matter should be at the discretion of local councils.

Christopher Leslie: Of course local councillors can have a full council meeting to scrutinise the council tax base if they so wish. Councillors must decide the council tax base either in their executive committee form or through some other mechanism. We are simply removing an unnecessarily rigid and unnecessary legislative provision that requires councils throughout the country to meet in full for that purpose.
 The requirement is an anomaly that was probably a panic measure introduced by the Conservatives when they were reversing out of the disaster of the poll tax. They needed to get as many people on board with the new mechanisms and legislated rather hastily. We hope that the clause will be seen to be a regulation lifting measure and that hon. Members will support it. 
 Clause 84 ordered to stand part of the Bill.

Clause 85 - Vacant dwellings: use of information obtained for council tax purposes

Question proposed, That the clause stand part of the Bill.

Edward Davey: I rise to support this important and long overdue measure. The Select Committee on Transport, Local Government and the Regions, which reported on empty homes last year, recommended that council tax information be used for purposes other than council tax calculation and collection—in particular, for a proactive housing strategy that attempts to bring empty houses back into the market and into use as a means of tackling the problem of homelessness. The move is welcome and gained all-party support in the Select Committee.
 I have two questions for the Minister. First, what additional policies are the Government pursuing to ensure that local authorities use the information as proactively as possible to bring empty houses back into the housing market? The crisis of affordable housing is one of the most pressing problems facing many local authorities. The power is greatly needed, but it should be accompanied by a panoply of measures. The Deputy Prime Minister hinted at some in his recent statement on sustainable communities, but we require a greater push from central Government working in tandem with local authorities and the Local Government Association to tackle the problem. 
 Dealing with empty properties provides a quick, cheap and environmentally sustainable solution to many housing problems. I was astonished when Jonathan Ellis, the chief executive of the Empty Homes Agency told me recently that every region of the country has more empty homes than homeless people. That is a measure of the importance of policies that will enable us to use this resource. I welcome the provision, but will the Minister tell us more about how 
 the Government will spread best practice among local authorities to ensure that the information is used in the most positive way? 
 My second question is about civil liberties. I support the measure, but we need to ensure that the information will not be used for purposes other than those contained in the Bill. Previous controls clearly limited the use of council tax information to council tax purposes. We are now widening the use of the information, but we must ensure that we preclude its use for purposes other than tackling the empty homes problem. We could speculate about what such purposes might be, but they would certainly be outwith the clause. Will the Minister tell us more about the positive ways in which the information will be used and reassure us that it will not be used for purposes other than those clearly laid down in the Bill relating to housing policy?

Geoffrey Clifton-Brown: The clause refers, through proposed new section 18A(1)(b), to using information for
''taking steps to bring vacant dwellings back into use.''
 That opens up a whole new ball game of purposes for which council tax information can be used. Paragraph 194 of the explanatory notes states: 
''The Information Commissioner has issued guidance advising authorities that they cannot use council tax data for other purposes''.
 That is the problem that the clause is intended to overcome, but, as the hon. Member for Kingston and Surbiton said, we need to probe further regarding other paths that might be followed. The information is privileged and confidential. Although it may be acceptable to use it to bring empty dwellings back into use, provided that it used reasonably, we need to reflect on what other purposes the Government might decide that the information could be used for. 
 Let me raise again the matter that I raised this morning about whether the clause is compatible with article 8 of the European convention on human rights, set out in schedule 1 of the Human Rights Act 1998, which addresses the right to privacy. Paragraph 196 of the explanatory notes makes it clear that the Government recognise that there is a problem: 
''The Government is conscious that it is arguable that allowing the use for other purposes of personal data collected for council tax purposes may in some circumstances constitute an interference with an individual's right to privacy protected by article 8 of the European Convention on Human Rights. It is considered that any data sharing permitted under clause 85 does not interfere with an individual's right to privacy. The data will be used only by the billing authority which collected it and it will be used only for public functions in the public interest. Clause 85 does not permit disclosure to third parties such as commercial organisations.''
 I should hope not, because if anyone did that, they would soon find themselves before the European Court of Human Rights. 
 Article 1 of the first protocol to the European convention on human rights, on the right of an individual to use his property free from interference from the state, which also appears in the Human Rights Act 1998, is in question, too. I am beginning to get worried about that as a result of the Deputy Prime 
 Minister's announcement last week on how he is going to treat empty properties. Will they increasingly be compulsorily acquired? Are they going to be compulsorily taken over and leased to individuals on the housing list? What is going to happen? This might be a whole new ball game, because the clause could become an oppressive mechanism for doing that. That is particularly the case with regard to proposed new paragraph 18A(1)(b), which mentions 
''taking steps to bring vacant dwellings back into use.''
 As the hon. Member for Kingston and Surbiton said, we all want more empty dwellings to be brought into use, but it would be wrong to use the jackboot of the state in that oppressive way by employing compulsory purchase powers to acquire people's dwellings because they are empty, even though they might not have fallen into disuse. If empty properties are falling into disuse and are causing a nuisance to neighbours, or degradation of the neighbourhood, it might be reasonable to start using those powers. However, that would not be the case if they were just empty properties, such as the millions of flats above shops. Will those flats now be subject to the powers that the Deputy Prime Minister has in mind? If so, some of the large institutional landowners might sit up and listen to what he is proposing. We need a clear explanation of what the Minister proposes that the clause should do, and how he proposes to operate the policy.

Desmond Swayne: A large proportion of empty properties are owned by local authorities, and they become uninhabitable because they have not been properly maintained for a long time.

Geoffrey Clifton-Brown: My hon. Friend is right. According to the Empty Homes Agency there are 753,000 empty properties in this country, and approximately 150,000 of them are owned by local authorities. For the vast majority of those properties, there is no excuse for their being empty. Sometimes there is a period between a tenant vacating a property and it being re-let because it needs to be completely refurbished. Only in that circumstance is there an excuse for its being empty. Re-letting policies are often not good enough and need to be tightened—I am thinking in particular of some badly run Labour authorities in London.

Edward Davey: Although I agree with what the hon. Gentleman said about councils that have poor re-letting records, does he agree that between 70 and 80 per cent. of empty homes are in the private sector? In boroughs such as mine, that figure can be as high as 90 per cent.

Geoffrey Clifton-Brown: I have just given the figures, so the hon. Gentleman can do his own maths to work out what percentage is in the private sector and what percentage is in the public sector. Regardless of the percentages, there are 150,000 empty properties in the public sector and that is far too many. The public authorities that are responsible for them are supposed to be acting in the public interest, and they should be operating a better policy. Also, they are often the authorities that have the highest homelessness needs, so there is a double whammy.

Nick Raynsford: That is only what Lady Porter used to do.

Geoffrey Clifton-Brown: This Government are doing it by a different means.

David Curry: Is not one problem the fact that in some of the very big northern cities such as Sheffield, demography is simply walking away from supply? Council housing is often the province of the relatively young and the relatively old—people who are not, on the whole, economically active. The real problem is that people are dying out in the buildings, leaving a significant number of properties that cannot be let. This is about getting to grips where necessary with transfers and demolition to renew the stock, probably on the basis of a smaller, more modern stock.

Geoffrey Clifton-Brown: My right hon. Friend may be seeking to defend an authority such as Sheffield. I would say to it, ''Get on and regenerate the area. Be more proactive in housing management.'' That can be done.

David Curry: Anyone who has witnessed the saga of the Sheffield tramway system will be hard pressed to defend Sheffield.

Geoffrey Clifton-Brown: Of course, my right hon. Friend lived through the saga in which businesses in Sheffield had to take the roofs off their factories to prevent themselves from going bankrupt. There are some aspects, at any rate, of Sheffield's record that no one would want to defend. That said, this is a serious clause, and we want the Government to tell us not only what they will do with the information, but how they will implement the policy on empty homes.

Paul Goodman: May I ask the Minister two questions? The first arises out of a point that my hon. Friend the Member for Cotswold has just made. Has the Minister taken legal advice about whether the clause could contravene article 1 of the European convention on human rights? I wanted to put that question to him directly, because the guidance refers to article 8, as my hon. Friend said, but not to article 1.
 Secondly, the Minister nodded when my hon. Friend read out this sentence from paragraph 196 of the explanatory notes: 
''It is considered that any data sharing permitted under clause 85 does not interfere with an individual's right to privacy.''
 I take that to be the Department's definitive legal view of the way in which the clause relates to article 8, but if that is so, why is the preceding sentence in the guidance? It states: 
''The Government is conscious that it is arguable that allowing the use for other purposes of personal data collected for council tax purposes may in some circumstances constitute an interference with an individual's right to privacy protected by article 8 of the European Convention on Human Rights.''
 As my hon. Friend said, that is a strong statement to put in the guidance. I should be grateful if the Minister would expand on why it is there.

Geoffrey Clifton-Brown: I am sure that my hon. Friend is aware that every Bill going through the House must have a certificate on the front. The front of this Bill states:
''Mr. Secretary Prescott has made the following statement under section 19(1)(a) of the Human Rights Act 1998:
In my view the provisions of the Local Government Bill are compatible with the Convention rights.''
 Is that statement correct, and has the Department taken specialist legal advice on the matter?

Paul Goodman: I was aware of that. As the Government presumably believe that the declaration on the front of the Bill holds weight, that returns me to the question that I put to the Minister. Why was such a strong sentence included in paragraph 196 of the guidance?

Lawrie Quinn: I seek clarification from the Minister. Lines 35 to 37 of the clause say that the power
''extends only to information which consists of an individual's name or an address or number for communicating with him.''
 What does ''number'' mean in the Bill? Presumably, it means a telephone number, but it could mean a national insurance or Army number. Perhaps the Minister could arrange for clarification of that point. My colleagues and I take scrutiny very seriously.

Geoffrey Clifton-Brown: Does the hon. Member for Scarborough envisage that that might be the number of the entitlement card that the Government are thinking of introducing?

Lawrie Quinn: In characteristic fashion, the hon. Gentleman forgets that my constituency is Scarborough and Whitby. As I have noticed over the past six years, that lack of attention to detail is typical of the Opposition. I am sure that my hon. Friend the Minister has the information about the number and can clarify the point.

Robert Syms: I support my hon. Friend the Member for Cotswold on this. It is sensible to collect data on the number of empty properties, but that does not tell us much unless there is a survey, or additional material about how to categorise them. As my right hon. Friend the Member for Skipton and Ripon said, some authorities may have substantial numbers of properties that need to be demolished or redeveloped, and others that could be brought back into use fairly quickly with a small amount of money.
 The dwellings counted will be those that are exempt for council tax purposes. Is it normal for the local authorities to inspect properties when they apply for an exemption on council tax? Is it possible for them to feed back information at that point? I would presume that someone would go round to look to see whether there was an exemption. Perhaps the Minister would say a little more about that. Numbers do not tell an awful lot unless there is some additional information—perhaps just a surveyor's opinion about how easily properties could come into usage. As my right hon. Friend said, there are some properties that one would not wish people to live in. Some of the 1960s high-rise blocks that are full of damp are not places where we would want to put young families now.

Christopher Leslie: I am rather surprised at the length of debate on the clause. The hon. Member for Kingston
 and Surbiton set the tone, and set off on the right foot by welcoming the clause and recognising that it enables billing authorities to use the information that they currently obtain to carry out their council tax functions to identify vacant dwellings and to take steps to bring them back into use. The purpose here is to ensure that if we have a large pool of empty premises, we can find out why, and who are the owners, and then see whether measures can be taken to ensure that they can be filled and put back into use, perhaps with those who are most in need of a home.
 The Local Government Finance Act 1992 does not contain clear provision allowing information collected pursuant to council tax powers under that Act to be used for other purposes by the authority that collected it. It contains only a power to allow regulations to be made permitting an authority to disclose non-personal information obtained under council tax powers to other persons for the non-council tax functions of those persons. The Office of the Information Commissioner has issued guidance advising local authorities that they cannot use for other purposes personal data obtained for council tax purposes. Consequently, clause 85 seeks to make it clear that there is legitimacy for billing authorities to use information obtained for the purposes of identifying those vacant dwellings and taking steps to bring them back into use. There are strong limits in the Bill that mean that it is only for those purposes that the information can be used. New paragraph 18A(2) sets that out. 
 My hon. Friend the Member for Scarborough and Whitby (Lawrie Quinn) asked whether the number for communication referred to in line 36 was perhaps an Army number or some other card number. It is a number for communication, so it would be a telephone number, a fax number or even an e-mail address.

Desmond Swayne: Could it be the GPS co-ordinates for someone's helipad?

Christopher Leslie: I am not sure that a GPS number is a means of communication. If the hon. Gentleman tries to dial one on his House of Commons telephone he might struggle to get through—but perhaps he is speaking to various other people on his telephone.
 The hon. Member for Kingston and Surbiton asked what extra efforts central Government were going to make to impress on authorities the need for that provision to be used. We have not issued any supplementary guidance at present. The provision is intended simply to allow local authorities to take advantage of the change that we are making. I will certainly bear in mind his suggestion that the matter must be promoted with local authorities, although I would not want to be too prescriptive. We always have to strike the right balance in the guidance that we give to local authorities.

Edward Davey: Will the Minister consider writing to all local authorities and especially to directors of housing to ensure that they know that the measure will be available and to encourage them to use it?

Christopher Leslie: I will certainly consider that suggestion, although I cannot guarantee that I will do that. We have been in discussion with the Local Government Association and the local government community at large about how the measure might benefit them. Opposition Members, especially the hon. Members for Cotswold and for Kingston and Surbiton, were concerned about civil liberty questions. The hon. Member for Wycombe (Mr. Goodman) thought that he had asked whether we had obtained legal advice. Actually, he did not. I will come to that matter presently. We have taken all necessary legal advice from our own parliamentary counsel and from other specialists in the field and they have certified that the Bill is compatible with human rights legislation. We included a sentence in the explanatory note saying that it was arguable whether there was some interference in those provisions; we did that because the argument had been made previously. Indeed, the hon. Gentleman has made the argument himself. However, we did not agree with that argument, which is why the second sentence of that explanatory note concludes as it does. The provisions of the human rights legislation allow a degree of limited interference to take place if it is in the public interest and if it is proportionate. In our judgment, the limited change that we propose is worthwhile, would be of benefit, is in the public interest and is proportionate.

Geoffrey Clifton-Brown: I sense that we are about to suspend, but before we do will the Minister tell the Committee how the information will be used? Will he also provide some explanation of the Deputy Prime Minister's policy on empty homes?

Christopher Leslie: That is a matter on which local authority housing departments and housing officers should make their own judgments. They are allowed to use information to take steps to bring vacant dwellings back into use and I am sure that the hon. Gentleman can imagine means by which we might want to contact those who own vacant dwellings. The clause in no way affects the legal provisions on compulsory purchase. The hon. Gentleman should have raised that issue in the Committee that considered the Planning and Compulsory Purchase Bill, on which he sat. Indeed, he may have done that.
 We believe that we have struck the right balance and that the clause does not interfere excessively, or in any significant way, with human rights issues. The provision is in the public interest, it is a proportionate step to take and it is in the interests of bringing empty homes into use. The Select Committee and the Empty Homes Agency recommended that councils should be allowed to have the opportunity to investigate such matters and I commend the clause to the Committee. 
 Question put and agreed to. 
 Clause 85 ordered to stand part of the Bill.

Clause 86 - Repeal of section 31 of the

Question proposed, That the clause stand part of the Bill.

Geoffrey Clifton-Brown: I am pleased that we will at least be able to complete this part before we suspend.
 The clause is the final death-knell for the council tax benefit subsidy limitation scheme—the so-called CTBSL scheme. [Interruption.] The Minister has the right acronym—full marks for being on the ball. My question is simple. The CTBSL scheme allowed precepting authorities to reimburse billing authorities if they were out of pocket because they had paid council tax benefit. Council tax benefit will continue, so local billing authorities will presumably be out of pocket. Will there be any mechanism for local authorities that are out of pocket as a result of having paid council tax benefit to recoup their loss from the precepting authority, or from the Government through the rate support grant mechanism?

Christopher Leslie: In trying to open up a debate on council tax benefit subsidy limitation, which I know all hon. Members are keen to discuss, the hon. Gentleman is perhaps missing the point of clause 86, which is simply to remove now redundant provisions in the Local Government Act 1999 that are remnants of the old subsidy system. The subsidy limitation process will no longer be in operation, so there is no question of financial arrangements being adversely affected. The measure simply repeals section 31 of the 1999 Act, which allowed regulations to be made requiring payments by major precepting authorities, whose council tax exceeded the threshold, to billing authorities that were responsible for administering council tax benefit. That scheme was no longer operated in England from 1 April 2002, so the section is redundant.
 The clause is a tidying up measure, and I hope that the hon. Gentleman accepts that explanation.

Geoffrey Clifton-Brown: I would accept it if the Under-Secretary had answered my question. If a council is out of pocket as a result of paying council tax benefit, who will reimburse them?

Christopher Leslie: Local authorities will not be out of pocket, because a subsidy limitation scheme will not be in operation. If that scheme is not operating, nothing will make them out of pocket. I hope that the hon. Gentleman realises that the provision is a remnant from the cessation of that financial mechanism. The system is no longer in effect, so there is no financial loss as a result of the clause.

Geoffrey Clifton-Brown: The Under-Secretary was repeating what his boss was saying to him from a sedentary position. Council tax benefit still exists, so if the local authority is not fully reimbursed, who pays the deficit? There must be some mechanism for it to be repaid. Who is it to repay it—the precepting authority or the Government through the rate support grant system?

Christopher Leslie: For the benefit of the Committee, it may help if I undertake to write to the hon. Gentleman on the matter.

Geoffrey Clifton-Brown: The Under-Secretary does not know, in other words.

Christopher Leslie: I do know, but the explanation is so obvious that the hon. Gentleman might want to see it in black and white.

Edward Davey: The Under-Secretary should remember that his Government introduced the council tax benefit limitation scheme as a shadow capping. If councils increased their council tax above a certain rate, council tax benefit was clawed back through the limitation scheme. That means that, without the scheme, the Treasury will fund council tax benefit according to the previous rules. Getting rid of the scheme and section 31 of the Local Government Act 1999 will assist local authorities rather than hinder them.

Christopher Leslie: My explanation was so clear to the hon. Member for Kingston and Surbiton that he was able to explain that.

Desmond Swayne: We still want the letter.

Christopher Leslie: The hon. Gentleman likes to receive correspondence from me, and I would not want to deprive him of that. I will ensure that we send him a letter on this point.
 Question put and agreed to. 
 Clause 86 ordered to stand part of the Bill.

Derek Conway: As we are about to embark on part 7 of the Bill, this would be a useful time to suspend. We will reconvene at exactly 5 o'clock, unless there is a Division in the House, which is possible. In that case, we will reconvene at 10 minutes past 5.
 Sitting suspended. 
 On resuming—

Clause 87 - Housing strategies and statements

Edward Davey: I beg to move amendment No. 150, in
clause 87, page 43, line 27, at end insert— 
 '(3A) In carrying out their functions under this Part, the appropriate person and the local housing authority must have particular regard to the provisions of sections 1 to 3 of the Homelessness Act 2002.'.

Derek Conway: With this it will be convenient to discuss amendment No. 170A, in
clause 87, page 43, line 29, at end insert— 
 '(5) The appropriate person shall pay to each local housing authority required to have a strategy a grant equivalent to the cost of preparing that strategy.'.

Edward Davey: This is a probing amendment, and I am grateful for Shelter's advice in helping me to draft it.
 The clause requires local housing authorities to have a housing strategy. One would think that most good local housing authorities already had one, but it is right to include this protection to ensure that they do. Shelter and I are concerned to ensure that some of the issues that the Government have required local housing authorities to consider are not lost under what some might suggest is a deregulatory measure. It was suggested that the Government were trying to reduce the number of strategies and reports that local housing authorities had to produce by trying to amalgamate all 
 aspects of housing strategy into one document. That may not be the case, but it is the reason for the amendment. 
 As the Minister will know, the first three sections of the Homelessness Act 2002, which I am not sure have even come into force, impose a duty on local housing authorities to produce a homelessness strategy. It is important to have an assurance from the Minister on the record, which I am sure we will have in due course, that the clause in no way undermines that other duty that the Government have devised. That duty was a welcome move in the 2002 Act, and we do not want to see it watered down. I strongly agree with Shelter that it is important to have it on the record that local housing authorities will be required to pursue their homelessness strategy, and that any prescriptions from the Office of the Deputy Prime Minister that are made under the new measure will include the need to ensure that homeless people are incorporated in the wider local housing authority strategy. 
 Will the Minister say what other aspects of housing strategy the Office of the Deputy Prime Minister believes will need to be developed? Before the Division, we talked about empty homes. An amendment could easily have been tabled that would require the Government to ensure that any prescriptions on local housing authorities' strategies were deemed to include a need to have an empty property strategy. I believe that that was one of the Government's intentions, but it would be good to be assured that that is so.

Geoffrey Clifton-Brown: I have no doubt that the hon. Gentleman has delved deep into the depths of the Bill. He will be aware of paragraph 75 of schedule 6, which incorporates the homeless plans under the Homelessness Act 2002.

Edward Davey: Indeed. Shelter and I discussed that paragraph, but we believed that we needed to have this debate because it is so important. I am sure that the Minister will agree, given his background.

Robert Syms: The clause is simple. It sets out the requirement for local housing authorities to have a local housing strategy. Will that strategy be limited to the local authority area that the local authority represents, or is it possible to have a strategy that takes a view beyond the boundaries of a particular area? In post-war years, many authorities, especially in London and other big cities, had a policy of moving people to satellite areas around Swindon and some of the new towns, and the Deputy Prime Minister recently announced the creation of substantial zones for additional housing. I understand that Milton Keynes and Ashford are among the lucky places. How will that gel with the housing strategy? If an authority thought that it could deliver some of that plan by setting out a strategy that went beyond its boundaries, would it be allowed to do so, or must it be specific to the boundaries of an area?[Mr. Win Griffiths in the Chair]

[Mr. Win Griffiths in the Chair]

Desmond Swayne: My hon. Friend the Member for Isle of Wight (Mr. Turner) cannot be with us, as he is in Southampton presenting a petition, signed by many thousands of his constituents, about the appalling
 state of the NHS on the Isle of Wight. However, he would not want his enterprising amendment to go unremarked. The amendment would make the Government pay for the cost of coming up with the strategy. It would be interesting to hear the Minister's analysis of what those costs might be.

Nick Raynsford: I have some sympathy with amendment No. 150 but I hope to satisfy the hon. Member for Kingston and Surbiton that it is not necessary, as we have already taken account of what it seeks to achieve. It is, of course, vital that housing and homelessness strategies support and reinforce one another, and existing guidance stresses the need for robust links between them.
 The hon. Member for Kingston and Surbiton asked whether the obligations in the Homelessness Act 2002 have come into effect. I can tell him that they did in July 2002. There should be robust links between housing and homelessness strategies and the overall housing strategy of the authority, and an integrated approach should continue to be encouraged, but we do not need to specify that much detail in the Bill. 
 I hope that hon. Members will welcome our proposal, set out in the explanatory notes, to give local authorities the option of rationalising their housing and homelessness strategies and home energy conservation reports into one document. That is not an obligation, but an option. As the hon. Member for Kingston and Surbiton rightly said, this is a deregulatory Bill, and we are, when possible, allowing authorities to streamline their arrangements according to their wishes. The only obligation is that for a housing strategy, for reasons that I shall come to. However, how local authorities meet that obligation, and whether they merge together homelessness, housing and home energy conservation strategies is entirely up to them. 
 I should stress that the Government continue to believe that a strategic response to homelessness is a key priority for local authorities. Clause 87 does not change the Homelessness Act 2002. If an authority chooses to incorporate the homelessness strategy into the broader housing strategy, the duties under the 2002 Act relating to objectives that may be included in an authority's homelessness strategy, consultation and involvement of other bodies that is necessary would still apply. 
 The hon. Member for Poole asked whether the strategy should be limited to an authority's boundaries or whether it could range wider. We would expect authorities to take account of the wider housing market for obvious reasons. Housing markets are not restricted to a local authority's area. However, the strategy must relate to what the authority can deliver within its boundaries. It would be unrealistic for an authority to base its strategy on assumptions about what other authorities will do. It can and should liaise with them, but it must focus on how the strategy affects the area for which it is responsible. I hope that that deals with the hon. Gentleman's question.

Geoffrey Clifton-Brown: I think that the Deputy Prime Minister let slip last Wednesday that regional housing
 bodies were to be created. Does that mean that there will be regional housing plans, and would local authority plans have to take into account the regional housing plan, as is the case for planning?

Nick Raynsford: I have news for the hon. Gentleman: regional housing plans already exist. That will probably cause him slight tremors of apoplexy. Such plans are part of the system. At the moment, the plans are prepared by unelected bodies that are representative of local authorities at a remove. However, the aim is that there will be greater focus and democratic accountability where people choose, through our regional proposals, to have an elected regional assembly. That is a separate matter and I shall not risk your wrath, Mr. Griffiths, by straying into that territory.

Geoffrey Clifton-Brown: I am now about to make a constructive point. Is the answer to the question raised by my hon. Friend the Member for Poole that the regional housing strategy will take into account the factors that he envisages? Further to that, will the local authority housing plans have to take account of what the regions prepare?

Nick Raynsford: The answer to both questions is yes. It is clearly foolish for an authority to assume that it can operate in isolation. I know of no areas of the country where a local authority area is the sole housing market. There are wider impacts from the surrounding area. It is right that authorities should take account of that fact. The regional strategy will inform the preparation of the local strategy. That seems to us to be the right way to take that broader view, but it should not in any way detract from the responsibility of the authority to have a strategy for housing needs within its area, including the full range of needs.
 Amendment No. 170A might have been appropriate if we were imposing a new burden on local authorities. However, housing strategies and housing revenue account business plans are already produced by authorities, although they are non-statutory. The requirement to introduce housing investment programmes goes back a long way, to the late 1970s, and throughout the 1980s and 1990s there has been an obligation on authorities to prepare detailed strategies, investment programmes and business plans to inform decisions that are taken about Government funding. 
 There is no new obligation on authorities that would justify additional grants. I should say in passing to the hon. Member for Cotswold, as amendment No. 170A has been tabled by Conservative Members, that authorities were given additional finance when we introduced resource accounting to enable them to implement the new arrangement. 
 Far from placing additional burdens on local authorities, the Bill will give them greater flexibility in meeting those and other existing statutory duties to produce housing-related plans. Local authorities will be free to rationalise the current plan requirements by addressing them in a single document, rather than in multiple documents, as they are currently required to do. I hope that, with those assurances, the hon. 
 Member for Kingston and Surbiton will withdraw his amendment.

Edward Davey: I thank the Minister. That was a helpful reply. With the leave of the Committee, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Desmond Swayne: The Minister will recall that my hon. Friend the Member for Runnymede and Weybridge uncharitably and unjustly referred to what he was saying as ''guff''.

Nick Raynsford: Inaccurately.

Desmond Swayne: Inaccurately, I accept that. There is no danger of the Minister having to revert to guff in his brief, because the guff is before us in clause 87(2):
''The appropriate person may require a local housing authority, by such time as the appropriate person may specify, to prepare and supply the appropriate person with a statement setting out such material of either of the following descriptions as the appropriate person may specify.''
 If it were just guff, it would not be so bad but as has already been pointed out, the clause imposes a statutory requirement on what is already being done. My concern is the additional powers inherent in that statutory provision. I refer to clause 87(1)(b)(i) to (iii), which imposes requirements on 
''(i) the ends that the strategy is to be designed to achieve,
(ii) the formulation of policy for the purposes of the strategy, or
(iii) review of the strategy.''
 How much additional leverage will the Government have as a consequence of the clause to determine the shape of the strategy? My reading of sub-paragraphs (i) to (iii) is that the appropriate person might spell out the strategy to the local authority. 
 The Government have peddled the whole Bill as a deregulating measure that will allow local authorities to get on with their policy. I have a question for the Minister about housing strategy. Will the statutory provisions placed on local authorities under the clause alleviate the position in the New Forest? I referred to it earlier, so it is not news to the Committee. 
 Our principal problem in the New Forest is the inability to deploy our budget according to local need and to build more affordable homes. We are required by a policy imposed by Whitehall to use the money to renovate our existing housing stock. That is perfectly proper action to take and many authorities need to be told to do it because they have neglected their stock for so long that much of it has become uninhabitable. That is not so in the New Forest. We have a desperate shortage of additional housing, yet we are ripping our good kitchens and putting in new ones just because we are required to do so. 
 I hope that the Minister will say that under the Bill such policies will no longer apply and that such decisions will be taken by local councillors who know the local needs and priorities. I rather think not, given my reading of subsection (1)(b)(i) to (iii), but I hope 
 that the Minister will disabuse me of that notion and reassure me about the clause.

Nick Raynsford: As I said in response to an earlier amendment, local authorities produce housing strategies and investment plans, and have done so for many years. There will be nothing new. The statutory obligation is set against a background in which there is now an obligation to produce a homelessness strategy. It would seem odd if an authority had an obligation to produce a homelessness strategy, but no statutory obligation to produce a wider housing strategy. That is why we felt that it was sensible to define clearly the obligation to produce a housing strategy, but allow flexibility so that the homelessness and the energy efficiency strategies could be incorporated within the document if the authority so wishes.
 The second issue raised by the hon. Member for New Forest, West was how much extra leverage the clause will give to the Government in respect of local authorities. I regard it not in those terms, but along the lines of a constructive relationship whereby the Government can relate in a targeted way to the needs of individual authorities. We expect to see that arising from the whole process of regional strategic housing plans, to which we referred earlier, as well as individual housing strategies. We expect there to be a constructive dialogue between officials in the Government and individual local authorities about their strategy and how the needs of their areas are being addressed. In turn, that would help to inform the financial allocation decisions. 
 As for the resources to maintain the existing housing stock, the hon. Member for New Forest, West will be aware that we have set an ambitious target to eliminate the problem of poor-quality public housing that does not come up to the usual decency standard by 2010. It would be impossible to deliver on that target if we did not ensure that resources were being applied throughout the country for that purpose. The major repairs allowance was introduced to ensure that there is a proper basis for funding the existing local authority stock regularly to maintain its condition, as well to put additional finance, when appropriate, into tackling the worst stock that needs to be renovated.

David Curry: When the Government produced their Green Paper on housing, the 2010 target was linked closely with the transfer programmes. Indeed, they outlined the number of transfers that they expected. Since then, there have been hiccups for Birmingham transfers. Councils such as Sheffield have withdrawn, but in the document published last week, to which many hon. Members have referred, the Government strongly reaffirm the transfer targets. What is necessary in terms of annual transfer to meet the target by 2010?

Nick Raynsford: The right hon. Gentleman was a housing Minister for several years in the mid-1990s and he will know that tenants in each area decide whether to transfer. It is impossible accurately to forecast what the numbers will be, because if tenants vote no, especially in a large authority such as
 Birmingham, it will have a considerable impact on that year's programme.
 The programme is continuing; many authorities are interested in the possibility of transfer and, with the obvious caveat that we cannot accurately forecast the precise numbers that will be delivered in any one year, we expect a continuing and significant transfer programme in the years ahead. That will make a sizeable contribution to meeting the decent homes target, but it will also be met through the maintenance of stock using the major repairs allowance; with measures such as the introduction of arm's length management organisations—ALMOs—which will provide an alternative route for authorities which wish to maintain their own stock; and through the application of investment finance for regeneration and clearance or replacement of some of the most substandard housing in many areas.

David Curry: The Green Paper stated the amount of stock. I stand to be corrected, but I believe that it quoted 180,000 transfers a year, although the figure may have been higher. Whatever the figures in the Green Paper, is Government policy still predicated on those figures?

Nick Raynsford: The Green Paper set out a target of 200,000 transfers a year and to the best of my knowledge that it is the figure that informs Government policy. However, for the reasons that I explained, it is not possible to give an accurate figure for a particular year.

David Curry: ALMOs can be established only by councils which are described in the new classification as excellent. They have been pretty slow to get under way and some councils thought that it would be an easy way of delivering the targets without going through the necessary hoops.
 What is the Minister's expectation of the proportion of transfers that will go through the ALMO hoops? Precious little has yet been done about PFI.

Nick Raynsford: There is a growing interest in ALMOs, which I expect to be an expanding part of the overall programme. Councils have been on a learning curve; they know they will get approval only if they can show that they are performing to a high standard in housing functions and to a high overall standard of performance in the management of the authority. The requirement to obtain a two or three-star rating for housing is a necessary incentive, which has limited the numbers who could qualify immediately. However, it is a stimulus and has encouraged others to try to improve their performance in order to qualify in future.
 I agree with the right hon. Gentleman that PFI is only just being explored. There is scope for expansion in that respect and we are highly pragmatic in wanting to explore all the realistic ways of meeting the target of eliminating the non-decent social housing by 2010. That is an ambitious target, which is why I said in response to the hon. Member for New Forest, West that we must ensure that resources are not diverted 
 from the maintenance of the housing stock to other purposes. However, I take the hon. Gentleman's point that provision of new housing in his constituency is needed. It will be considered as part of the communities plan announced last week by my right hon. Friend the Deputy Prime Minister, which recognised the need for additional housing provision to cope with the shortage and the demand for affordable housing in the south.

Edward Davey: The Minister is discussing wider housing policy such as ALMOs, stock transfers, PFI and so on. Is he aware of the work undertaken by those in the National Assembly for Wales who talked to financial institutions and received legal advice about using mutuals as a way of transferring housing stock, so that the management of the new housing association is directly accountable to the tenants?

Nick Raynsford: I am not aware of that. My direct responsibility for the housing function ceased in June 2001 and, although I take a close interest in these matters, I have not been involved in detailed discussions with a devolved authority. I am sure that if what the hon. Gentleman reports is right, it will be another interesting possibility, and colleagues in Wales will no doubt explore it.
 I hope that, with that explanation, hon. Members will accept that clause 87 is a sensible and positive addition to the Bill.

Geoffrey Clifton-Brown: Will the Minister comment on what seems to be a new procedure? Even if it is not new, it needs amplifying. My hon. Friend the Member for New Forest, West came across this. Instead of issuing guidance, which would be the normal way to go about these matters, there is now a procedure whereby
''The appropriate person may . . . impose requirements''.
 Why is the Minister using that route? It seems much more centralising and control-centred than issuing guidance. 
 The advantage of issuing guidance would be that anyone who felt aggrieved that the local authority had not followed the guidance could seek judicial review. Indeed, the council itself could seek judicial review as to whether it was following the guidance. As the requirements are to be imposed, there can be no obligation for local authorities to refuse them. It would be interesting to know why the Minister has gone for this procedure. 
 What requirements may the Minister impose in respect of the empty homes strategy? Clearly, the Government must have something in mind. It would be interesting to know what guidance they will issue to local authorities, particularly those in London whose management of re-letting empty properties is far from adequate. Those are precisely the type of authorities on which requirements should be imposed.

Nick Raynsford: We do not expect the requirements referred to in the clause to differ in any way from what authorities are asked to comply with on a non-statutory basis under the current arrangements. In response to a question asked by the hon. Member for New Forest, West, I explained that we are giving effect
 to the statutory provision simply to avoid the anomaly whereby an authority would be required to produce a homelessness strategy, but had no statutory obligation to produce a housing strategy. We do not expect there to be a significant difference.
 We agree that it is necessary in some cases to be more direct. In certain cases in which authorities have had serious problems with properties that are not well managed or that are vacant because of low demand, we have acted. We will continue to act in such cases to encourage authorities to address the problem, rather than deluding themselves that somehow all will be well in due course and that they will find people to occupy properties that manifestly will not be filled in the foreseeable future. To avoid areas being blighted by neglect, we have in certain instances given authorities directions to produce strategies to tackle such problems. We will continue to do so, but there is no material change from the way in which we have been operating up to now. That has been largely under the non-statutory framework. 
 Question put and agreed to. 
 Clause 87 ordered to stand part of the Bill. 
 Clause 88 ordered to stand part of the Bill.

Clause 89 - Housing revenue account subsidy: payment and calculation

Geoffrey Clifton-Brown: I beg to move amendment No. 171, in
clause 89, page 44, line 21, leave out 'determine' and insert 'order'.

Win Griffiths: With this it will be convenient to discuss amendment No. 171A, in
clause 89, page 45, line 17, at end insert— 
 '(1B) An order made under this section in England shall be subject to annulment in pursuance of a resolution of either House of Parliament.'.

Geoffrey Clifton-Brown: The amendment would tighten up the procedure. Clause 89 reads:
''The amount of Housing Revenue Account subsidy (if any) payable to a local housing authority for a year shall be calculated in such manner as the appropriate person may from time to time determine.''
 My hon. Friend the Member for New Forest, West would be alarmed by the arbitrary nature of the appropriate person's powers. We feel that it should be tighten up and subject to some form of parliamentary scrutiny. The amendment is simple, and I hope that the Minister will accept it.

Nick Raynsford: I am sorry to disappoint the hon. Gentleman, but the amendment is unnecessary. The power to calculate housing revenue account subsidy by determination is not new. The HRA subsidy settlement has been made by determination for well over a decade, as set out in the Local Government and Housing Act 1989. We are open about the procedure. Before making a determination, the legislation requires the Secretary of State to consult representatives of local government and other relevant professional bodies, and in practice we also
 consult every local authority before making the annual general determination. The start of the consultation period is announced in the House each year and copies of the relevant papers are made available. We make copies of the final subsidy determination available to the House as well. Furthermore, local authorities and their representative bodies are generally consulted on proposed changes to policy on HRA subsidy before the start of the statutory consultation on the draft determination.
 From time to time, it has been necessary to make changes to the determinations to meet the needs of individual authorities. It is far more straightforward, and quicker, if they can be handled without parliamentary procedure. As I said, we consult authorities whenever we make a determination, and to add a further statutory requirement to the statutory consultation duties would add an unnecessary layer of bureaucracy. HRA subsidy is already subject to a proper degree of parliamentary scrutiny. 
 The total subsidy is approved by Parliament as part of our request for resources. Payments of housing revenue subsidy are recorded in the annual accounts of the Office of the Deputy Prime Minister and are open to scrutiny by Parliament and the National Audit Office. Clause 89 will provide more flexibility in the calculation of the HRA subsidy by allowing non-formulaic matters to be taken into account. That will enable us to be more receptive to the circumstances of individual authorities. 
 One example is that it will allow us to tailor funding more closely to the requirements of individual arm's length management organisations based on different investment needs as shown in their HRA business plans. If we are to be responsive to the variations that exist among areas, we need that flexibility. Given our decent homes target, it is important that we have such flexibility to target scarce resources effectively. We accept that authorities need to know the basis on which the subsidy will be calculated, which is why we intend to continue to consult widely on HRA subsidy policy.

Brian Iddon: My right hon. Friend knows that many towns throughout the country have been concerned about the so-called double whammy in the housing revenue account. We all contribute towards HRA subsidy through general taxation, but council tenants also contribute through their rents to other people's housing benefit—hence the double whammy. I welcome the separation of the housing benefit account from the housing revenue account, but can my right hon. Friend tell the tenants that this is an end to the double whammy and that everyone will be playing on a level playing field?

Nick Raynsford: Yes, I can. This is the end to the incorporation of housing subsidy elements in the housing revenue account. In future, the HRA will be simply a landlord account that will incorporate the costs involved in managing and maintaining the property and the debt repayment on the capital cost of providing it. It will also take into account the income that comes predominantly from tenants' rents. However, it will not include any reference to housing benefit, which is properly separate because it relates to
 the needs of individual tenants who qualify for the national assistance or subsidy to meet the cost of their rents.
 The clause makes the process much clearer and more transparent and would ensure that housing resources are used specifically for housing needs. We will discuss the specific arrangements in a later clause, but I assure hon. Members that the clause makes it quite clear that the era in which tenants worry that their rent pays for other tenants' housing benefit is at an end. That no longer happens. 
 With those reassurances, I hope that hon. Members will withdraw their amendment. We will discuss the clause in due course.

Andrew Turner: I am happy to support the amendment moved by my hon. Friend the Member for Cotswold and I am not wholly convinced by the Minister's responses. His argument seems to be that if a past Government got it wrong, the current Government are entitled to get it wrong. However, an improved measure of scrutiny is available and would be achieved by incorporation of the amendment. I worry about the importation of what the Minister called non-formulaic measures into his assessment, which means arbitrary or pork barrel. I worry about his use of the word ''generally'' when talking about the consultation because that implies ''sometimes it is not''.
 All hon. Members are concerned from time to time, depending on which party is in Government, about whether the Government are adopting an approach that is fair to their local authorities, tenants and constituents. The best way to judge whether it is fair or to ensure that power is not exercised arbitrarily is to subject it to the parliamentary process—not when the accounts are reviewed a year or so later, but when the procedure is adopted. 
 I am attracted to the use of the word ''order'' in new paragraph (1) of clause 89(2), which sets out how the calculation should take place. It would not prevent the Minister from taking account of the needs of particular housing management vehicles. In his answer to my hon. Friend, he suggested that that would happen and that he would be deprived of flexibility. Although being required to be up-front about a procedure when it is adopted would deprive him of flexibility, it would not prevent him from taking account of the particular needs of housing management vehicles. For that reason, I hope that my hon. Friend will press the Minister further.

Desmond Swayne: The Library has produced a helpful research paper, 02/71. On page 32 it states:
''Clause 89 will amend section 80 of the 1989 Act so that HRA subsidy may be calculated in such a manner as the Secretary of State or National Assembly for Wales may determine. Such a determination may provide for all or part of the amount to be calculated in accordance with formulae, or with reference to other factors, such as the authority's HRA business plan or the discharge of its housing functions. The Explanatory Notes to the Bill advise that this will provide 'greater flexibility in calculating the amount of HRA subsidy payable to authorities'.''
 I bet it will. That is the whole problem with the Government's approach to flexibility. It is not 
 transparent. It contains those factors that Ministers choose to include at their discretion. It is not bound by a formula that we can see and measure and predict from, which is precisely the difficulty with this clause. 
 We have seen the Government's approach already. We have seen the performance of the new arrangements for local authority planning which are much less transparent and involve vast amounts of Ministers' discretion, as these arrangements will supply. As the Minister says, it may well be much easier to deal with local authorities without the inconvenience of having to go through parliamentary scrutiny and a parliamentary process, but what are Labour Members for? Why are they here? Are they not supposed to scrutinise such matters? Are they intent on voting for provisions so that they need do nothing all day, or do they have a residual function?

Nick Raynsford: I shall say a little about fairness. I remind the hon. Member for New Forest, West that, when we came into power, we inherited a budget for local authority housing—housing investment programme allocations—of £1.1 billion. The figure for current year is £2.63 billion, despite the fact that the size of the local authority housing stock has reduced during that period because of the substantial number of stock transfers. The Government are investing; they are improving on that appalling legacy.
Mr. Swayne rose—

Nick Raynsford: No, I want the hon. Gentleman to hear what I have to say. When we came into office, there was a £19 billion backlog of poor conditions. We are tackling the problem. We are improving houses. The measures will make it possible for us to meet our target, so that each local authority-property in the country is in a fit condition by 2010.

Desmond Swayne: The Minister congratulates himself on spending so much more money. Has it not occurred to him that, because he is spending so much money, there is a requirement for such action to be scrutinised by a parliamentary process? He cannot simply adopt the position that, because budgets have increased—he is so much more munificent and is spending so much more—we can simply dispense with the discretion that the amendments would put in place.

Nick Raynsford: I have already made it clear that our annual accounts and our proposals for expenditure are scrutinised. The annual housing investment programme is subject to widespread consultation. The most important scrutiny comes from tenants with new windows, roofs, heating and whose properties are not in the shameful condition that was being experienced by many in 1997. Many tenants recognise the importance of our actions and I assure the hon. Gentleman that we shall continue to take it until we have met our target.

Geoffrey Clifton-Brown: I am grateful to the Minister for giving way; I thought that he was about to have a seizure. It is all very well spending money on existing stock but if a person does not have a house to go into, that is a much more serious matter. This country now has the largest number of homeless people that it has ever seen. The right hon. Gentleman's housing strategy is in a mess.

Nick Raynsford: That is not the subject of the amendment, which is about housing revenue account subsidy. I am more than happy on other occasions to deal with homelessness, which we debated under the previous clause, and housing provision. My right hon. Friend the Deputy Prime Minister has made it clear that we are committed to a considerable expansion during the next few years under our communities plan. However, we are debating the new proposals for housing revenue account subsidy, which will provide for the additional resources that we have been making available to be used to best effect to ensure the improvement of our housing stock. I hope that the hon. Gentleman will now recognise that his amendments are neither appropriate nor necessary. I hope that he will agree to withdraw them.

Andrew Turner: Can the Minister assist me? I may have taken his earlier remarks a little too literally. He said that all that the clause was doing was re-enacting earlier provisions with the removal of the housing benefit element. Yet the notes provided by the Library suggest that the clause gives him greater flexibility. If it is merely a re-enactment of previous provisions, how can the clause give him more flexibility?

Nick Raynsford: I fear that the hon. Gentleman has confused clause 89 with the previous clause, in which we talked about giving statutory effect to the existing arrangement for housing strategies. I made it clear in a speech that I made on clause 89—I am sorry if he did not listen carefully—that we are deliberately ensuring that there is more flexibility in order to take account of the different circumstances of local authorities. That would be appropriate in any such strategy. We must be sensitive to the fact that there are differences and huge variations between areas and those must be reflected if we are to meet our housing needs.

Geoffrey Clifton-Brown: Will the Minister assure me that there is nothing in the clause that could be used to control public sector rents?

Nick Raynsford: Those are guided by the overall framework for rent restructuring, which we established after the long period of consultation following the publication of the Green Paper in 1999. The resultant strategy ensures that the jumble of rents that we inherited, which bore no relationship to the size, attractiveness or quality of accommodation in the public sector, were made more coherent. That applies to registered social landlords and to local authorities.
 I am pleased to say that good progress is being made and there is a large measure of agreement that that long-term strategy is the right way forward. The hon. Gentleman will recognise that one cannot cause short-term disruption to an individual's budget, or to the budgets of organisations that have an expectation about their rental income. A long-term process of adjustment is taking place and that informs the overall strategy. The housing revenue account subsidy takes account of that situation. It will make allowance for the level of rental income that individual authorities can achieve and it is aggregated to provide a national figure. There is a relationship, but that is not designed to give us new tools to influence public sector rent levels. We have already set out our policy on public sector rent, we are implementing it and there is a 
 coherent national framework for achieving it. The provision is just one relevant mechanism, but it will not be the determinant factor.

Geoffrey Clifton-Brown: I dropped a stone in the pond—I did not expect to get waves.

David Curry: What did you expect?

Geoffrey Clifton-Brown: I expected ripples.
Lawrie Quinn rose—

Geoffrey Clifton-Brown: I give way to the hon. Member for Scarborough and Whitby. I apologise to the people of Whitby; I did not mean to insult them earlier.

Lawrie Quinn: We make progress—six years later. I am sure that people will read Hansard to find out what that was all about.
 Does the hon. Gentleman not understand the simple laws of physics? Has he ever visited the seaside? Has he ever studied what happens when a stone is dropped into water?

Geoffrey Clifton-Brown: I do understand the simple laws of physics and it is possible to drop a stone into the sea and see whether there are ripples or waves. The laws of physics dictate that the harder the stone is pushed, the bigger the waves or ripples. I chucked a stone at the Minister and I was surprised at the force that I had used, because I got a bigger response that I had expected. [Interruption.] As my hon. Friend the Member for Wycombe says, that is not only a function of the force with which the stone is chucked, it is also a function of its size. I hope—before you rule me out of order, Mr. Griffiths—that that demonstrates to the hon. Member for Scarborough and Whitby that I have studied the basic laws of physics.

Lawrie Quinn: If the hon. Gentleman had studied that subject, he would also know that that is something to do with the depth of the water. He has clearly demonstrated his lack of depth of understanding of this subject.

Win Griffiths: Order. That is enough on that subject, interesting though it was. We will stick to the matter in hand.

Geoffrey Clifton-Brown: The intervention is not worth responding to, Mr. Griffiths, even if I were tempted to do so.

Desmond Swayne: I have an intervention.

Geoffrey Clifton-Brown: I am sure that my hon. Friend's intervention will be thoroughly worth while.

Desmond Swayne: Reading further in the research paper, to which I referred earlier and on which I would be interested to hear my hon. Friend's comments, I note that on page 34 it says:
''The Select Committee concluded that the Government should adopt a transparent approach to housing finance and, in particular, 'that decisions should not be based on an assessment of business plans when such an approach has been rejected for local government finance more widely.'' '
 That was precisely the approach to which the Under-Secretary referred when discussing the Government's intention.

Geoffrey Clifton-Brown: My hon. Friend makes a telling intervention. I am coming on to the transparency of the powers under clause 89, but I want to stick with rents for a minute. I want to understand whether this could be used as a mechanism to control rents in the public sector, perhaps by limiting the rent rebate subsidy payable to a particular group of authorities by the Government under the Social Security Act 1989 where they decide that rents are rising too fast.
 Perhaps I am going too far ahead and being too suspicious, but I suspect that that is what will happen. I am also rather suspicious of the rent reorganisation body. I do not know whether my hon. Friends have heard about it. Perhaps the Under-Secretary will let us know more about what it will do. If rents are to be controlled, how will he reconcile the growing gap between the public sector and the private open market? 
 My second point is allied to my hon. Friend's intervention. The more that one reads this clause, the more centralising and dictatorial it appears. I draw the Committee's attention to the following conditions on which the appropriate person must satisfy himself in proposed new subsection (1A)(b) under subsection (2) by reference to: 
''(ii) the appropriate person's assessment of any Housing Revenue Account business plan prepared . . . 
 (iii) whether conditions are met that relate to, or to the authority's conduct of, the authority's finances . . . 
 (iv) an assessment of the state of, or of the authority's conduct . . . 
 (v) whether conditions are met that relate to housing provided by the authority . . . 
 (vi) an assessment of, or of the state of, housing provided by the authority; 
 (vii) an assessment of the authority's performance in exercising functions . . . 
 (viii) whether, as respects housing provided by the authority, management functions exercisable in relation to that housing have been entrusted to a company; 
 (ix) whether, where such functions have been entrusted to a company . . . 
 (x) an assessment, where such functions have been entrusted to a company . . . 
 (xi) assumptions as to any other matter''—
 the catch-all phrase. 
Mr. Turner rose—

Geoffrey Clifton-Brown: It gets worse:
''(c) have the effect that the amount, or part of the amount, is nil or a negative amount; 
 (d) make different provisions for different parts of the amount''.
 Then subsection (5)(5) states: 
''Nothing in subsections (1A) to (4) above is to be taken as limiting the appropriate person's discretion under subsection (1) above''.
 Hon. Members may laugh, but the provisions give wide all-embracing powers to the Secretary of State. It will not always be a Labour Secretary of State; one day there will be a Conservative Secretary of State and the Labour party may regret having provided these powers. 
 Let me finish. This is the real catch-all; subsection (5)(6) states: 
''The appropriate person may make a determination under subsection (1) above, or a calculation under such a determination, on the basis of information received by him on or before such a date as he thinks fit''.
 In other words, clause 89 gives the Secretary of State power to do almost exactly as he likes with any housing revenue account finances. That is a disgrace. Our amendment giving parliamentary scrutiny is essential and I shall urge my hon. Friends to vote for it. I give way to my hon. Friend.

Andrew Turner: I was going to intervene, but I am happy to make a speech if you prefer, Mr. Griffiths.

Win Griffiths: It is your time, not mine, that is being used up.

Andrew Turner: I was going to say that the Office of the Deputy Prime Minister is behind the times because other Departments have realised that one cannot micro-manage the functions of local authorities. They have taken a while in that discovery, but the Department for Education and Skills, for example, introduced a Bill in 1998 which subsequently became an Act and gave the Secretary of State huge powers to manage almost everything that goes on in schools.
 Since even before general election, the Department has said, ''Hang on, we've got it wrong. We've taken far too many powers away from local authorities, teachers, head teachers and governors and aggregated them to Whitehall where we are incapable of exercising them.'' The Government have been retreating from the position that they adopted.

Geoffrey Clifton-Brown: Is my hon. Friend aware of another example? When the right hon. Member for Holborn and St. Pancras (Mr. Dobson) was Secretary of State for Health, he centralised the powers for running the health service in Whitehall. His successors have had to decentralise some of that power because it was so unmanageable.

Andrew Turner: My hon. Friend's analysis is correct. It distinguishes a Government who are new and enthusiastic, but utterly incapable of working out what they can and cannot do, from a Government who are mature and sensible, and discovering the practical limits of the levers that Ministers and civil servants can pull in Whitehall. The Department of Health and the Department for Education and Skills are becoming aware of the limitations, but the Deputy Prime Minister is utterly unaware of them, which is why this highly centralising clause is built into the Bill.
 Is the clause a simple re-enactment of what went before? The Minister suggested that since time immemorial—or at least since 1989—the provisions could have been determined by Ministers instead of approved by the House. My hon. Friend the Member for New Forest, West, whose attention is elsewhere—it has now returned, so it was obviously a momentary lapse—cited a paragraph providing the Minister with greater flexibility. If the flexibility is ''greater'', it must be greater than under the 1989 Act. If I accept the Minister's assurance that it does not hang on the term ''determine'', how does the provision confer greater flexibility?

Desmond Swayne: Does my hon. Friend accept that the greater the flexibility afforded to the Minister, the
 greater the scrutiny to which he should be subjected? That is why the amendments are so important.

Geoffrey Clifton-Brown: My hon. Friend runs ahead of me and makes the very point that I was about to make, so I have no cause to detain the Committee any longer.
 Question put, That the amendment be made:—
The Committee divided: Ayes 6, Noes 11.

Question accordingly negatived. 
 The Chairman, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendments proposed thereto, forthwith put the Question, pursuant to Standing Orders Nos. 68 and 89, That the clause stand part of the Bill. 
 Question agreed to. 
 Clause 89 ordered to stand part of the Bill.

Clause 90 - Housing Revenue Account subsidy: negative amounts

Edward Davey: I beg to move amendment No. 166, in
clause 90, page 46, line 16, at end insert— 
 '(6) The Secretary of State or the National Assembly for Wales shall keep for each financial year an account (to be called a negative housing subsidy account). 
 (a) The Secretary of State or the National Assembly for Wales shall keep each account in such form as the Treasury may direct, and 
 (b) The Secretary of State or the National Assembly for Wales shall at such time as the Treasury may direct send copies of each account to the Comptroller and Auditor General. 
 (7) The Comptroller and Auditor General shall examine, certify and report on any account sent to him under subparagraph (2) above and shall lay copies of the account and his report before each House of Parliament or in the case of Wales before the National Assembly for Wales. 
 (8) For each financial year the following shall be credited to the account kept for the year— 
 (a) sums received by the appropriate person in the year under subsection (1)(b) above. 
 (9) For each financial year the following shall be debited to the account kept for the year— 
 (a) payments made by the Secretary of State, or in the case of Wales—the National Assembly for Wales, in the year under paragraph 11 below. 
 (10) Before a financial year begins the Secretary of State, or in the case of Wales the National Assembly for Wales, shall estimate— 
 (a) the aggregate of the items of account that will be credited to the account kept for the year; and 
 (b) the aggregate of the items of account that will be debited to the account kept for the year under paragraph. 
 (11) The Secretary of State or the National Assembly for Wales shall make payments to the housing revenue accounts of local authorities. 
 (12) The aggregate of the payments made under subsection (11) above shall not be less than the estimate made by the Secretary of State or the National Assembly for Wales under subsection (10)(a) above. 
 (13) The Secretary of State or the National Assembly for Wales shall determine a scheme for the payments to local authorities— 
 (a) the scheme shall take account of the need for investment in the housing owned by that authority. 
 (14) In this section ''local authority'' means— 
 (a) in relation to England— 
 (i) a district council, 
 (ii) a county council that is the council for a county in which there are no district councils, 
 (iii) a London borough council, 
 (iv) the Common Council of the City of London, or 
 (v) the Council of the Isles of Scilly. 
 (b) in relation to Wales, a county council or a county borough council.'.
 I shall speak to this probing amendment in a quiet and calm manner. We are pleased that these clauses are legislating for what the Minister, in answer to the hon. Member for Bolton, South-East (Dr. Iddon), described as a landlord account. The provisions remove rent rebates and rent rebate subsidy from the housing revenue account. That is welcome, and will create transparency. 
 However, there is a concern, and I am grateful to Unison and the Local Government Information Unit for bringing it to my attention and suggesting the probing amendment. The surpluses that will accrue to several local housing authorities from HRA will, under the Bill, go directly to the Treasury, or the Secretary of State. There are concerns that the Bill is really proposing that one method by which the HRAs were subsidising the Treasury, when the rent rebates and rent rebate subsidies were within the HRA, be substituted for another, whereby rents and any surpluses from HRA are taken back to the centre. The amendment probes the Government on that issue, and is intended to allow us to learn the Government's intentions for surpluses on HRA. That is a genuine point. 
 Clearly, HRAs are generating extra money from council tenants' rents, and the use to which that money is put is an important issue. Does it go into the general pot of the Consolidated Fund? Could it be used for council expenditure other than housing, or to reduce council tax, for example? Unison and the Local Government Information Unit were keen to know whether the money will, in some way, go back into housing. I hope that the Minister can give me an assurance.

Geoffrey Clifton-Brown: I shall certainly not be quiet about this monstrous clause. I shall quote paragraph 230 of the explanatory note so that Committee members are fully aware of what the clause does:
''This will ensure that authorities which are able to generate surplus rental income, even though incurring management and maintenance etc expenditure comparable with other authorities, 
make a contribution towards meeting the costs incurred by authorities which cannot generate sufficient rent income to meet such costs.''
 Well, I think that those authorities should tailor their costs to their rental income. This monstrous clause means that the efficient will subsidise the inefficient.

Edward Davey: Before the hon. Gentleman develops his argument any further, will he tell us whether the Conservative Government devised HRA in that way?

Geoffrey Clifton-Brown: I was waiting for that question, but I thought it would come not from the Liberals but from the Minister, because he has used the same argument before. The difference is that the Government's proposals are completely arbitrary, whereas ours were formulaic. Every HRA subsidy had to be prepared on the same basis, but that will not be the case once the Bill receives Royal Assent. The provision is arbitrary and unfair.

Win Griffiths: Is the hon. Gentleman supporting the amendment, or speaking against it? Until now, his argument has been against the clause rather than for the amendment. I hope that he will clarify it.

Geoffrey Clifton-Brown: I am against the clause and the amendment.

Win Griffiths: I would be grateful if the hon. Gentleman would concentrate on the amendment.

Geoffrey Clifton-Brown: Certainly. This is a long rambling amendment that covers almost everything under the sun. I was just trying to put what the clause did into context, so as to explain what amendment would do.
 How can the provisions be fair, and how does the amendment tabled by the hon. Member for Kingston and Surbiton address the problem? The answer is that it does not in any way help with the clause. It would merely put many more obligations on the Secretary of State and the National Assembly for Wales. Instead of curtailing the wrong that has been perpetrated by the clause, the amendment would make it easier for it to happen. 
 I cannot understand how it can be fair and just that authorities—whether Labour, Liberal, or Conservative—that have well run housing revenue account subsidies should have that surplus given away to authorities that are badly run and whose rents will not meet their costs. The Minister shakes his head, but that is what the clause will do. Surely it would be fairer if authorities in surplus had to spend that money on providing more affordable housing. Then we might be getting somewhere. As it stands at the moment, they will have the surplus taken away and it will go straight into a black hole. This is a highly controversial clause. I will urge my hon. Friends to vote against its standing part of the Bill—and I shall listen with interest to what the Minister has to say about the amendment, because I am thinking of urging my hon. Friends to vote against that as well.

[Mr. Derek Conway in the Chair]

Nick Raynsford: We have had a measured speech from the hon. Member for Kingston and Surbiton, in
 which he made it clear that his amendment was essentially designed to probe the Government's intentions and to find out whether we could give a guarantee that all the proceeds derived from the mechanism would be used for housing purposes. I pleased to be able to give him that, and I shall expand on it in a moment.
 We heard an interesting contribution from the hon. Member for Cotswold, who used a term that described his own speech well: long-winded, rambling, covering just about everything under the sun—

Phil Woolas: And unnecessary.

Nick Raynsford: I did not use the word unnecessary, but my hon. Friend the Member for Oldham, East and Saddleworth (Mr. Woolas) rightly reminds me that that was also one of the terms used. The hon. Member for Cotswold quoted selectively from the explanatory notes, at paragraph 230. Perhaps I could remind him that paragraph 231 then explains:
''This is effectively what happens under the present HRA subsidy arrangements, whereby the surplus is set off against that part of subsidy which is attributable to rent rebates. But the present arrangements are not consistent with the new financial framework for local authority housing (including resource accounting)''—
 which I gather that the Opposition are in favour of. Indeed the right hon. Member for Haltemprice and Howden (David Davis) is a strong advocate of resource accounting, so we assume that they support it. The current arrangements are not consistent with that and—again I quote from paragraph 231: 
''are not well understood. That is why rent rebates are being removed from the HRA. When that happens, the current redistributive mechanism will no longer be available.''
 For that reason we need a new redistributive mechanism, and that is what the clause sets out. The amendment would require us to keep a separate ring-fenced account of the amounts paid to local authorities and to pay those amounts into their housing revenue accounts. In our view that is over-bureaucratic, and not necessary. I hope that when the hon. Member for Kingston and Surbiton hears the explanation, he will agree to withdraw his amendment. 
 The Government believe that it would be wrong for council housing either to subsidise or be subsidised by the council tax payer. My colleagues and I agree that the resources captured through the pooling of HRA surpluses should be, and will be, used for housing. We have made clear commitments on the use of the pooled HRA subsidy negative amounts on a number of previous occasions. We have repeatedly stated—in our November 1999 consultation paper on the handling of rent rebates under resource accounting, in the local government White Paper that we issued in December 2001 and in the explanatory notes to this Bill—that our intention is to use the pooled surpluses towards providing housing revenue account subsidy to authorities that are in deficit because their assumed expenditure on housing stock exceeds assumed rental income.

Geoffrey Clifton-Brown: Can the Minister tell us approximately how much money is involved in the pooled housing revenue account surplus?

Nick Raynsford: I shall give the hon. Member an accurate total figure in a moment. The principle is that every authority has a housing revenue account; the income predominantly comprises tenants' rents, and the expenditure is predominantly debt charges and management and maintenance costs. Authorities that cannot meet their expenditure from income will be in deficit, and will receive housing revenue account subsidy. Those whose income exceeds their outgoings will create a surplus that will be treated under the provisions of the Bill, and it will be pooled to meet the costs of authorities that are in deficit.
 The hon. Gentleman implied that that would involve the efficient subsidising the inefficient. That is not the case. The fact that authorities happen to be in surplus rather than deficit is largely due to historical features, expenditure and housing stock. Authorities from all parts of the country are currently in surplus. They include Aylesbury Vale, Cherwell, Chester, Daventry, Derbyshire Dales, East Hertfordshire, East Staffordshire, Erewash, Fylde, Isles of Scilly, Lichfield, Shrewsbury and Atcham, South Cambridge, St. Edmundsbury, Sunderland and Uttlesford. This list does not reflect any political bias; it reflects the way in which housing has been paid for over time, the size of the stock and the circumstances of the local authority.

Andrew Turner: I agree that the list covers all parts of the country, although there are more rural authorities than urban ones. [Interruption.] I hear the word ''some''. Can the right hon. Gentleman explain why it is wrong for a council tax payer in an area where the housing revenue account is in deficit to subsidise the housing revenue account, but it is right for a tenant in an area where the housing revenue account is not in deficit, which may be hundreds of miles away, to subsidise that same housing revenue account?

Nick Raynsford: The housing account is a national housing account. We do not want to create a situation in which there are allegations of unfairness because council tax payers complain that they are paying a subsidy towards tenants in their area.
 Conversely, tenants who pay their rent and also their council tax would feel aggrieved if they felt that a rent surplus was being used to meet the council tax to which they had already contributed. We believe that is inequitable. It is right and proper that housing that has largely been paid for by national support, with the Government meeting a large proportion of the cost, should be treated as a national asset. The surpluses that have accumulated in certain areas are due largely to historical factors, and they should be made available to help support the deficits in other areas.

Andrew Turner: The right hon. Gentleman has given an excellent explanation of why he thinks it is wrong for the council tax payer to subsidise the tenant, but he has failed to explain why he thinks it is right for a tenant in Sunderland to subsidise a tenant in the New Forest, for example. The obvious response of the people who run council housing in Sunderland is to offer their tenants a rent holiday; the surplus disappears, and their tenants will be very pleased.

Nick Raynsford: The hon. Gentleman's argument would have some validity if we were not operating
 within the framework of a national rent restructuring scheme designed to ensure that there is a rational rent structure throughout the country. If that framework were not in place, there could easily be arbitrary changes in rent levels according to the economic circumstances of individual areas, which would create the kind of anomalies that we highlighted in our Green Paper in 1999. Many tenants who were occupying large council properties could not consider transferring to a smaller housing association home, although they would have liked to do so and it would have freed up a larger home for a larger family, because the different rent structures—which were very marked—meant that the rent charged for a smaller property was greater than the rent for a larger property.
 Such anomalies led us to put in place a national framework, to achieve coherence and consistency. That guarantees to people whose authorities have a surplus that is being used to subsidise housing elsewhere that they are not being penalised because rents are not being artificially lifted above the level that, under the framework, is regarded as appropriate for their location. Therefore, there is a safeguard for them, as well as additional finance for housing to ensure that we achieve the best use of our resources throughout the country.

Geoffrey Clifton-Brown: The Minister is doing his best to make a good case out of a bad situation. What is actually happening is that tenants in Sunderland are paying a higher rent than they otherwise would need to, and that money is subsidising other authorities—perhaps in the south of England—that are inefficiently run. Perhaps the Minister is saying that under his rent restructuring programme he will move towards a single national rent? Can he really be saying that? If not, it must be right that the residents of Sunderland should benefit from their authority's efficiency; that would lead them to want to vote for it for many years to come, which must also be right.

Nick Raynsford: I agree with the hon. Gentleman that Sunderland is an efficient and well run authority. It had a good comprehensive performance assessment and his plaudits are deserved. None the less, Sunderland's rent structure should be consistent with that of the surrounding north-eastern region—it would be very odd if it was not. That is guaranteed by our overall rent restructuring framework, because of which the tenants of Sunderland can feel confident that they are not being charged a higher rent than is appropriate; there is a transfer to other authorities simply because, happily, a surplus is being generated on their housing revenue account. That does not penalise them or make them pay an artificially inflated rent.

Brian Iddon: People who represent urban areas such as mine are amazed by some of the contributions that we have heard throughout the consideration of the Bill from the Opposition Benches—from the official Opposition, in particular. They seem to have completely forgotten the history of housing. Many authorities had to build their way out of amazing slum clearance problems, for example, so their debt is
 historical. In my opinion, the Conservatives have always totally disregarded such authorities.

Nick Raynsford: As always, my hon. Friend makes a valid point. He has highlighted the fact that the existence of surpluses in some areas and deficits in others is largely the product of history—and in particular, of programmes for tackling the housing problems that he mentioned. Because of that, it is unjustified to assume that authorities that happen to have a surplus on their housing revenue account are efficient and that those that are in deficit are inefficient. That is not the case. I think that the hon. Member for Cotswold was moving towards recognising that when he conceded that Sunderland was an efficient and well run authority.

Geoffrey Clifton-Brown: Has the Minister not spotted a big anomaly in his argument? On one hand he is forcing council rents up through this mechanism, but on the other hand he is encouraging councils to transfer their housing stock to registered social landlords. One thing that makes tenants transfer is the idea that their rents will be kept down. How can the two situations be reconciled?

Nick Raynsford: Neither of those assumptions is correct. We are trying to ensure that there are decent quality homes throughout the country—the national decent homes standard—and we are using the increased resources being put into housing to ensure that we tackle the poor conditions that still exist in too many areas. We are establishing a framework for greater consistency and fairness in the rents set for tenants with different tenures in different parts of the country. The anomalies that we inherited are being tackled to ensure that resources are used to best effect. The clause is a common-sense provision.
 I was asked how much HRA surplus was involved. The figure for 2002–03 is £660 million, which will be paid into the pool in future together with the Treasury contribution to meet the need for housing revenue account subsidy for the authorities in deficit. 
 In response to the hon. Member for Kingston and Surbiton, I can say that section 80(2) of the Local Government and Housing Act 1989 means that the 18 English authorities that currently have a housing element surplus that exceeds their rent rebate subsidy entitlement must transfer an equivalent amount to their general fund. By repealing section 80(2), clause 90 will ensure that such authorities pay the surplus into the pool, subject to any transitional arrangements to protect council tax payers. Once the transitional arrangements are ended, none of the notional HRA surplus will be paid into the general fund, thus stopping the current subsidy of council tax by council tenants. 
 There is no need for a separate mechanism for the payments of those amounts to local authorities' housing revenue accounts, as the surpluses will be paid to authorities as part of housing revenue account subsidy, which is paid into authorities' housing revenue accounts. As the housing revenue account is ring-fenced, that will prevent such resources from simply being absorbed into general council budgets. 
 The requirement to account separately for the sums paid by authorities to the Secretary of State or the National Assembly for Wales under clause 90 is an unnecessary bureaucratic burden, which would increase administrative effort at no advantage to local housing authorities. 
 Amendment No. 166 would require the Secretary of State to pay out to local authorities' housing revenue accounts for a year an amount not less than an estimate made before the start of the financial year. However, as all hon. Members will understand, the final amounts of HRA surplus to be collected will not be known with certainty until the final audited data is available from authorities after the end of the financial year. There are all sorts of changes in the course of a year, not least the number of properties in the stock because of right-to-buy sales and so on, and it is impossible to make the calculation on the basis of an estimate made before the start of the financial year.

Edward Davey: The Minister has been very helpful, although he was occasionally sidetracked during the debate. Am I correct in thinking that the Government intend that the surpluses generated should be kept for housing but that they do not want to develop a bureaucratic procedure for that purpose? How will the Government account for flows in and out? When we inspect Government and local authority accounts, we want to be able to see whether what the Minister said would be done has been achieved.

Nick Raynsford: I can give the hon. Gentleman the assurance that he seeks, as I did at the beginning of the debate before I went on to explain the mechanisms for transfers and the flow of funds. They will be visible, and the overall figures will be available for hon. Members and the National Audit Office to scrutinise.

Geoffrey Clifton-Brown: The Minister has been very patient. It is one thing for flows of money to be visible but another to ensure that the authorities being subsidised are efficient. Can the Minister assure us that his Department will look critically at those authorities whose HRA is in deficit, and therefore in receipt of pooled moneys, to ensure that the funds are not squandered because of inefficiency?

Nick Raynsford: I remind the hon. Gentleman that in the debate on the previous clause he went into a great tirade against provisions specifically designed to ensure that housing revenue accounts are compiled efficiently. He cannot have it both ways. He attacked us over those provisions, but now he wants an assurance on efficiency. I hope that he will accept that we are committed to trying to achieve efficiency.
 I hope that the hon. Member for Kingston and Surbiton agrees, subject to the reassurances that I have given him, that we are committed to using the sums paid to my right hon. Friend the Secretary of State, or the National Assembly for Wales, to support housing under the housing revenue account. I hope that he will withdraw the amendment.

Edward Davey: I am grateful for the Minister's assurances and I shall not press the amendment. Having listened to the debate, however, I have concerns, and I have sympathy with some contributions made by Conservative Members. I am
 concerned about the notion of a national housing revenue account and everything being controlled from the top down. I am also concerned about the rent restructuring policies.
 There is a need to remove some of the anomalies in housing markets, but the Government are going significantly beyond that for purposes that are outside the confines of this debate. I think particularly of issues such as housing benefit reform, but I do not want to go into those, because they are separate housing policy issues. The former system, which the Government inherited from the previous Conservative Administration, was not transparent and was unfair. The Government are trying to rectify that, and I think that the Minister has assured me that money will not come out of the housing sector. That is what I sought, so I am grateful to him. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Geoffrey Clifton-Brown: This is the tripod of the Government's stool of redistribution of large amounts of money from well-run Conservative authorities to badly run Labour authorities. We have seen that in the pooling of capital receipts and in resource equalisation. The third element is the subsidy from efficient, well-run housing authorities to inefficient authorities. [Laughter.] The Minister may laugh, but I do not know how he can hold his head up proudly and ask tenants in East Hampshire, Basingstoke, Erewash or Sunderland, which are well-run authorities, to subsidise tenants—[Interruption.] The Minister has never heard of Erewash, but it is in Derbyshire.

Nick Raynsford: I have heard of it.

Geoffrey Clifton-Brown: The Minister says that he has heard of Erewash. I do not know how he can stand here and tell the Committee that the tenants of those housing authorities will have to pay extra rent to subsidise tenants of badly run authorities. I urge my hon. Friends to vote against clause stand part: the clause is a disgrace.
 Question put, That the clause stand part of the Bill:—
The Committee divided: Ayes 12, Noes 4.

Question accordingly agreed to. 
 Clause 90 ordered to stand part of the Bill.

Clause 91 - Housing Revenue Accounts etc: adaptation of enactments

Geoffrey Clifton-Brown: I beg to move amendment No. 196, in
clause 91, page 47, line 21, leave out 'authorities' and insert 'classes of authority.'.
 This is a probing amendment to draw attention to the wide and arbitrary nature of subsection (4)(b) of proposed new section 87A, which provides the power to 
''make different provision for different cases or authorities.''
 The amendment is straightforward. I do not expect the Minister to accept it, but the clause is widely drawn. We have heard about the arbitrary nature of previous clauses, and clause 91 builds on that with a vengeance. Proposed new subsection (1) says: 
''The appropriate person may by order . . . amend, repeal or re-enact provisions of this Part of this Act (including provisions of Schedule 4 to this Act)''.
 Proposed new subsection (2) continues that such an order may 
''confer discretions, or expand, curtail or repeal discretions conferred, on the appropriate person or any other person''.
 We are not told who that other person is; perhaps the Minister will tell us. As I said, proposed new subsection (4)(b) says that the order may 
''make different provision for different cases or authorities.''
 In other words, the Secretary of State may treat each authority exactly as he likes. 
 The Bill is arbitrary, but the clause is even more so. Parliament is not doing its duty unless it scrutinises such Bills more carefully. If we are going to agree to provisions that give complete power to the Secretary of State, I do not know why we bother to have local authorities at all. The Secretary of State could run it all from Whitehall.

Nick Raynsford: Amendment No. 196 would prevent the Government from making modifications by order to part 6 of the Local Government and Housing Act 1989 for individual authorities. It would restrict different provision to different cases or classes of authority. If a local authority falls into particularly dire circumstances, it is only right for us to have maximum flexibility to consider special provision for just that one authority. In such circumstances, it may be necessary to amend, for example, the items to be credited or debited to the housing revenue account.
 Part 4 of schedule 4 to the 1989 Act already provides a power to direct that the provisions of part 6 be excluded or modified in relation to specific authorities, houses or other property within the housing revenue account. That already allows us some flexibility. The new powers in clause 91 are broader, allowing, for example, new items to be specified for credits or debits to the housing revenue account. That will give us the maximum possible flexibility when dealing with extreme situations. The existing direction-making power is not subject to parliamentary scrutiny, but the new order-making 
 power will be subject in England to scrutiny by affirmative resolution of each House of Parliament. 
 I hope that the hon. Gentleman recognises that there is a fully accountable framework. The provision allows necessary flexibility for dealing with specific authorities in difficulty, and I hope that he recognises that that is desirable and that the amendment is inappropriate.

Andrew Turner: The right hon. Gentleman talked about authorities in a dire position. Does he believe that that is an adequate reason for adopting the powers not only in such a case, but on any subject on which his Department has contact with local authorities?

Nick Raynsford: It is appropriate in the circumstances. We are talking about a specific amendment relating to a specific clause. We regard it as appropriate, and as I said, the provision is subject to the affirmative procedure, so there can be no question that it would not be subject to thorough parliamentary scrutiny. I hope that the Committee will accept that it is appropriate.

Geoffrey Clifton-Brown: Although I criticised the clause for being arbitrary, which it is, at least it is subject to some parliamentary scrutiny. I suppose one has to be thankful for small mercies, so I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 91 ordered to stand part of the Bill.

Clause 92 - Local housing authority houses: rents

Question proposed, That the clause stand part of the Bill.

Geoffrey Clifton-Brown: Again, I must refer the Committee to the explanatory notes, especially paragraph 237. I wish to probe the Minister about the interaction between the clause and the Government's rent restructuring policies. The explanatory notes state:
''Section 24(3) requires authorities, when setting their rents, to have regard to the principle that rents of houses of any class or description should bear broadly the same proportion to private sector rents as the rents of houses of any other class or description. In certain circumstances, the requirements of section 24(3) might make it difficult for authorities to comply in the longer term with the Government's rent restructuring policy in England.''
 I want to know more about the rent restructuring policy. It seems to be deliberately designed to hold rents down in the public sector and to set a uniform rate for equivalent properties throughout England. The Minister may prove my assumption wrong. However, irrespective of that, I suspect that the Government's rent restructuring policy is to try to hold down public sector rents so that they will not have to pay so much housing benefit, which is increasing at a great rate. 
 If that is the Government's policy, they will have to explain what will happen to the housing market, because there will be a widening gap between rents in the public and private sectors. That is all very well for those who have sufficient priority need to get a public 
 sector house, but those who must rent in the private sector will be much worse off than their cousins in the public sector. Is that fair? 
 When one considers housing revenue accounts subsidies and other subsidies paid for by the general taxpayer, people who are broadly in the public sector should have to pay broadly the same as those in the private sector. After all, those paying the higher private sector rents are probably paying taxes to subsidise the people who pay lower rents in the public sector. The Minister must tell us clearly: what do the Government have mind for their rent restructuring policy?

Nick Raynsford: Clause 92(1) effectively repeals section 24(3) of the Housing Act 1985 in England by limiting its effect so that it applies only to Wales. Section 24(3) requires local authorities in England and Wales, when setting rents, to have regard to the principle that rents of houses of any class or description should be in broadly the same proportion to private sector rents as the rents of houses of any other class or description. Since April 2002, our rent restructuring policy for the social housing sector in England has encouraged social landlords to move their rents towards a national rents formula, which is designed to produce a pattern of rents that is fairer and more coherent to tenants, while keeping rents affordable and well below market levels. By 2012, it is expected that most English local authority rents will be similar to those produced by the national rents formula. The formula varies from area to area. It takes account of the market to a degree, but also takes account of affordability.
 If the hon. Gentleman thinks about the matter, he will realise that there is very little market pressure in some areas where private sector rents may be relatively low. In other areas—we are located in central London, the most pressurised area in the country—rents are extremely high because of enormous demand. 
 A wide variation in public sector rents, determined by the market, would not be appropriate because it would effectively prevent people priced out by the market from being able to afford accommodation designed to be affordable. We must understand that affordability should play a key role. That is why we do not believe that direct linkage to private sector rents is the right way forward. However, the formula takes account of market elements to a degree. The formula allows for variation between regions, areas, sizes and types of properties, but would ensure that rents were lower than the market rents that would apply in the private sector. The variation is particularly marked where there is a high private sector market, and where rents would be completely unaffordable for those on modest incomes if they simply aped rents in the private sector.

Geoffrey Clifton-Brown: I want to probe the Minister on the national rent formula. The very words imply a policy to ensure, somehow, that public sector rents are the same in every area. Is that the intention, and if not, why is it called a national rent formula, and not a local authority or regional rent formula?

Nick Raynsford: It is a national formula because, as I have explained, it is designed to cover all housing available for social letting purposes. The formula relates not only to local authorities but to registered social landlords, and that is why it cannot be called the local authority formula. The formula takes account of the market to a degree, but we need to ensure that properties are affordable to those on modest incomes, and that damps that considerably. We take affordability into account more than the market does. The simple function of affordable housing is that it should be available to those on modest incomes, and that they should not be priced out.
 As the formula will vary rents from area to area and region to region, there will, to a degree, be a reflection of the wider market. Obviously, rents will also vary depending on the size of the property. The formula will create a coherent framework, so that tenants can make informed decisions when they want to move from one area to another, or from one size of property to another. People can expect generally to pay more for larger accommodation, or if they are moving to a high demand area. There will now be coherence, instead of the wholly arbitrary and incoherent framework that previously existed.

Geoffrey Clifton-Brown: Whatever else the formula does, it will make it difficult for registered social landlords to build more affordable houses. If rents were allowed to approach market rents, landlords could build more affordable houses.

Nick Raynsford: Whether they could let them would be an interesting question. It is important to ensure that there are sustainable dwellings, and that those for whom the homes are designed can afford them. It is also important that tenants are not trapped in benefit dependency. That was the consequence of the policy pursued by the Conservative Government. The rents of registered social landlords were forced up to very high levels in order to minimise the Government's contribution to the social housing grant and, as a result, many tenants were trapped in such a dependency. That was not a sensible policy.
 We are working closely with RSLs. As I said, the process must be handled carefully, and will take a long time, as we cannot disrupt people's budgets or those of organisations who have planned on assumed income streams. Although it will take a long time to bring the process into effect, it will create a proper and coherent framework of rents and, crucially, will ensure that social housing landlords, whether RSL or local authority, can find tenants who can afford to occupy their properties. We are thinking about ensuring sustainability of affordable housing. 
 I hope that I have given the hon. Gentleman the assurances that he wanted. The provision is not designed to hold rents down artificially, but will keep them below market levels so that people can afford them. It will not impose a uniform level throughout the United Kingdom; there will be variety and a reflection of local markets. That is a sensible way forward. The only reason why the clause excludes Wales is that the Assembly will need 
 to consider its own policy, and, since we would not wish to pre-empt that, we are not repealing the provision in Wales. We are doing that in England to allow the rent re-structuring framework to be put in place.

Andrew Turner: I accept the Minister's explanation as far as Wales is concerned, but I find the rest of it curious. His complaint seems to be that the current arrangements require the registered social landlord to set his rent in a way that somehow reflects private sector rents in the area. His objection seems to be that private sector rents are too high and that to set private sector rents in other areas, even though they may not be too high, might enable a surplus to build up in the housing revenue account. Accordingly, he wants to tax that account. We have already debated that issue.
 It is hard to understand the Minister's assertion that registered social landlords could build properties but might not find tenants who could afford to occupy them. I accept that they might find it hard to find tenants; that could happen if too many properties were built in the past. That is one reason why my hon. Friend the Member for Cotswold described some, but not all, authorities as inefficient. Hull springs to mind. The authority there has built too many properties, and it cannot find enough tenants, in spite of relatively low rents. As a consequence, it is in deep difficulty. 
 The Minister suggests that landlords in high-rent areas will not be able to find tenants. However, according to him and the Deputy Prime Minister such areas, which are mainly in the south-east of England, have the greatest shortage of social housing. Our housing benefit system is designed not to subsidise property, which seems to be the Minister's approach, but to subsidise individuals in need, regardless of whether they choose or are fortunate enough—many of them do not choose—to occupy public or private sector housing. It is hard to understand why the Minister has chosen to subsidise bricks and mortar instead of the people who need help. Similarly, it is hard to understand why he has chosen to subsidise bricks and mortar at the expense of people—taxpayers—who occupy other properties and who would dearly love to live in social housing if only the rents were kept lower than those in the private sector. 
 The Minister tried to explain why he has introduced a national rent formula. I accept that explanation, and I thank my hon. Friend the Member for Cotswold for drawing it out of the right hon. Gentleman. I accept that the national rent formula will not set a national rent, but it will set a national formula on which rents in different local authority areas will be based. 
 I cannot for the life of me see why the Minister feels the need to impose a means of determining rents on housing authorities. If an authority is as efficient as Sunderland, to use the Minister's example, the people who live in that area should benefit from any efficiency, the tenants having presumably been among those who voted for the councillors who made the authority efficient. Similarly, those who live in an inefficient authority—I will not speculate on which it might 
 be—presumably voted for the councillors who made it inefficient. I accept that there is an element of rough justice about that, but there is equally an element of rough justice about the amount of council tax that people pay. Efficient authorities tend to build up surpluses and are able thereby to reduce the council tax. If people live in—

Edward Davey: On a point of order, Mr. Conway. The knife is about to fall and many clauses have not been debated. Some of those are extraordinarily significant, including changes to the trading and charging rules in respect of local authorities throughout the country, measures that relate to the transfer of staff and their pensions, and provisions relating to terms and conditions. It is a great shame that the Committee will not be able to debate them. I know that some hon. Members will blame the Government for their timetabling motion and the knives. However, people who read our proceedings as thoroughly as perhaps they should will see that others also bear responsibility.
 I should like your guidance from the Chair, Mr. Conway, as to whether there is any other parliamentary means by which the issues contained in the clause could be debated. For example, could they be debated in an Adjournment debate or on Report?

Derek Conway: The programme motion is not a matter for the Chairman, and therefore we will proceed to the conclusion as instructed.
 With regard to the hon. Gentleman's point of order, the Committee will report back to the House, and I am sure that he will seek to catch the eye of Mr. Speaker to contribute to the debate on that matter when the Bill is reported. 
 The Chairman must, however, be confined by the programme motion and I am now required to put the outstanding questions. 
 It being Seven o'clock, The Chairman proceeded to put forthwith the Question already proposed from the Chair. 
 Question put, That the clause stand part of the Bill:—
The Committee divided: Ayes 11, Noes 4.

Question accordingly agreed to. 
 Clause 92 ordered to stand part of the Bill. 
 Question put, That clauses 93 to 100 and schedule 3 stand part of the Bill:—
The Committee divided: Ayes 11, Noes 6.

Question accordingly agreed to. 
 Clauses 93 to 100 and schedule 3 ordered to stand part of the Bill.

Clause 101 - Staff transfer matters: general

Amendments proposed: No. 124, in 
''clause 101, page 54, line 10, after 'authority' insert '(in Scotland, a relevant authority)'.''
 No. 125, in 
''clause 101, page 54, line 25, after 'authority' insert '(in Scotland, a relevant authority)'.''
 No. 126, in 
''clause 101, page 54, line 32, at end insert—
'( ) The duties under sections 1 and 2 of the Local Government in Scotland Act 2003 (asp 00) (best value) of a relevant authority have effect subject to subsections (1) and (3).'' '
 No. 127, in 
''clause 101, page 54, line 35, after 'authorities' insert '(or, as the case may be, relevant authorities)'.''
 No. 128, in 
''clause 101, page 54, line 42, at end insert—
'( ) In this section—
''appropriate person'', in relation to Scotland, means the Scottish Ministers; and ''relevant authority'' means—
(a) a council constituted under section 2 of the Local Government etc. (Scotland) Act 1994 (c.39),
(b) the Strathclyde Passenger Transport Authority, or
(c) any other body to which Part 1 of the Local Government in Scotland Act 2003 (asp 00) (best value and accountability) applies.'' '—[Mr. Raynsford.]
 Question put, That the amendments be made:
The Committee divided: Ayes 11, Noes 4.

Question accordingly agreed to. 
 Clause 101, as amended, ordered to stand part of the Bill.

Clause 102 - Staff transfer matters: pensions

Amendments made: No. 129, in 
''clause 102, page 56, line 22, at end insert—
' ''appropriate person'', in relation to Scotland, means the Scottish Ministers;' ''.
 No. 130, in 
''clause 102, page 56, line 23, after first 'authority' insert—
(a) in relation to England and Wales,'' '.
 No. 131, in 
''clause 102, page 56, line 25, at end insert ', and
(b) in relation to Scotland, means a council constituted under section 2 of the Local Government etc. (Scotland) Act 1994 (c.39);' ''.—[Mr. Raynsford.]
 Question put, That clause 102, as amended, and clauses 103 to 105 stand part of the Bill.
The Committee divided: Ayes 11, Noes 6.

Question accordingly agreed to. 
 Clause 102, as amended, and clauses 103 to 105 ordered to stand part of the Bill.

Schedule 4 - The Valuation Tribunal Service

Amendments made: No. 145, in 
''schedule 4, page 84, line 18, leave out from beginning to 'he' in line 19 and insert—
'(aa) he is the subject of a bankruptcy restrictions order or interim order;
(b) a bankruptcy order has been made against him by a court in Northern Ireland, his estate has been sequestrated by a court in Scotland or, under the law of Northern Ireland or Scotland,'.
 No. 146 
''schedule 4, page 90, line 9, at end insert—
'The Enterprise Act 2002 (c.40)
(1) Paragraph 2(1)(b), (2) and (3) shall be taken to be within the definition of ''provision'' in section 268 of the Enterprise Act 2002 (power to remove bankruptcy disqualifications under pre-8th 
November 2002 provisions or extend them to, or replace them with disqualifications of, persons subject to bankruptcy restrictions regimes).
(2) That section shall apply in relation to paragraph 2(1)(b), (2) and (3) as if—
(a) subsections (5)(d), (6) to (8) and (15) (power to make application of disqualification provision subject to person's discretion) were omitted, and
(b) for subsection (13) (orders under section to be made by statutory instrument after parliamentary approval of a draft) there were substituted—
''(13) An order under this section—
(a) must be made by statutory instrument, and
(b) shall be subject to annulment in pursuance of a resolution of either House of Parliament.'' ' ''—[Mr. Raynsford.]
 Question put, That schedule 4, as amended, clause 106, schedule 5 and clauses 107 to 116 stand part of the Bill.
The Committee divided: Ayes 11, Noes 6.

Schedule 4, as amended, clause 106, schedule 5 and clauses 107 to 116 ordered to stand part of the Bill.
Motion made, and Question proposed, That further consideration be now adjourned.—[Mr. Woolas.]
The Committee divided: Ayes 11, Noes 6.

Question accordingly agreed to. 
 Adjourned accordingly at ten minutes past Seven o'clock till Thursday 13 February at five minutes to Nine o'clock.